‘Squeezed’: How much you need to earn to buy a house

SEARCH YOUR SUBURB. Home prices fell in Hobart last year but it’s now harder to buy a property — here’s why.

THE dream of owning a home has become more challenging in Hobart over the past 12 months, despite a cooler property market.

Lower median house prices in most suburbs sounds like an increased opportunity for buyers to put a roof over their heads. However, sharply rising interest rates have eroded that advantage and made home loans less affordable to service now than they were at this time last year.

Comparison website Finder’s analysis of PropTrack home pricing data shows greater Hobart’s budding homebuyers are about $10,000 worse off now compared to last year.

The median value of a Hobart dwelling, houses and units combined, has slipped from $702,000 to $663,000.

Finder found that with the rate shift from 4.96 per cent last January to 6.23 per cent in 2024 — on a typical 30-year loan with a 20 per cent deposit — buyers need an income of $130,355 today compared to $120,043 in 2023.

At a suburb level, there are over 15 Hobart suburbs where buyers require an income in excess of $150,000 to be able to service a median-priced mortgage. This includes Tranmere, Acton Park and Sandy Bay where an income of $207,896 up to $253,468 is needed.

Of the 104 suburbs analysed, only 15 posted median house price growth.

By percentage, the largest change in the income required to buy in the Hobart and South East regions was in Kingborough suburb Margate.

Margate house prices rose by 5 per cent, and combined with interest rate increases, the minimum income requirement grew $26,971 higher, a 20 per cent change.

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LJ Hooker Pinnacle Property has No.371 Nierinna Rd, Margate on the market priced at "Offers over $1.79m".

Blackmans Bay house prices increased by 1 per cent, but the income requirement pushed from $140,404 to $162,831, a 16 per cent uptick.

Buyers in the country town Ranelagh need to earn $18,716 more now than last year (up 16 per cent), while a 15 per cent change in Huonville and Cygnet has increased earnings requirements by over $16,500 each.

In the north, booming Westbury recorded 10 per cent growth in its median house price. The minimum income requirements to buy a typical house have shot from $88,196 to $111,690, a 27 per cent increase.

Port Sorell, Perth and Shearwater all recorded a 21 per cent increase in the income needed to buy.

The north’s most expensive suburb was East Launceston, where buying a median home requires an income of almost $180,000. That’s 19 per cent higher than last year.

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REIT president Michael Walsh.

Real Estate Institute of Tasmania president Michael Walsh said this data shows the financial pressure that buyers are under when weighing up their choices.

He said for some people, it may mean purchasing further out from their first option, in a more affordable area.

“For young people, likely renters, the increased cost of paying a mortgage will likely mean they need to save for longer to build a bigger deposit,” Mr Walsh said.

“And that is not easy to do when the cost of living has increased substantially and our rental asks are often higher than they used to be.”

No.56 Wells Pde Blackmans Bay is listed with Knight Frank at "Offers over $1.35m".

Finder’s head of consumer research Graham Cooke said homeseekers were getting squeezed by rising interest rates and home prices, often by amounts that eclipsed average wage increases.

Many successful buyers who have purchased properties in the last year may be getting help from the bank of mum and dad, Mr Cooke said.

“Many homeseekers’ parents were likely sitting on large amounts of equity in their properties, which was often being channelled into the purchases of their adult children,” he said.

“If you’ve grown up with property-owning parents, you’re going to be more privileged when it comes to buying,” Mr Cooke said, pointing to additional Finder research that showed homebuyers who got assistance from their parents received an average contribution of $56,000 towards their deposit.

Finder’s head of consumer research Graham Cooke.

Meanwhile, Finder’s research showed there were six suburbs that met the analysis requirements and are cheaper now than they were last year.

By percentage, a Sorell mortgage is now 5 per cent more affordable. By dollar value, Richmond buyers need $6708 less to pay a mortgage than at this time last year.

Midway Point, Old Beach, Geilston Bay, Oakdowns are also more affordable.

Beachside Carlton recorded a 13 per cent decrease in its median house price, making loan payments essentially flat with only a $128 difference compared year-on-year.

Originally published as ‘Squeezed’: How much you need to earn to buy a house