Sydney real estate: does your home earn more than you?

Homeowners in many Sydney suburbs have been earning four times more money each year from their homes than their jobs. Find out if you live in one of them with our interactive tool.

Sydney homes have been making their owners wealthy in rapid time – earning them more in a year than most workers make in a decade.

The luckiest house owners pocketed an average of more than $500,000 from their properties each of the past three financial years, research provided exclusively to the Saturday Telegraph showed.

These rises dwarfed the earnings of even the highest paid professionals, including anaesthetists and surgeons, who typically pocketed about $390,000 a year.

Property owners’ increase in wealth was due to record rises in housing values, with many homeowners making millions in short time without lifting a finger.

The research, powered with realestate.com.au data, showed homeowners made the most wealth gains in “lifestyle” suburbs with larger blocks or locations near the coast.

Sellers Tim and Natalie, with their five children, were surprised how much their home value increased. Picture: Sam Ruttyn

Houses in north shore suburbs Killara and East Killara increased in value by an average of $582,000 a year since 2018. This was five times the $115,000 local residents typically earned in annual wages.

There were similar gains for house owners in neighbouring north shore suburbs Northbridge, Cremorne and, in the east, Bondi and Tamarama.

Homeowners in the fastest growing suburbs in Greater Western Sydney, including Dural and Middle Dural, made about $277,000 annually from their homes. This was roughly three times the average income in the area.

But it wasn’t just in boom suburbs where house ownership delivered wealth.

The average house owner in Greater Sydney made $115,000 a year from their properties – well above the nearly $80,000 average annual income of city residents.

Homeowners in no other capital, save Hobart, earned more from their houses than their jobs, a remarkable feat considering Sydney wages tended to be higher than in the rest of the country.

Owning a Sydney apartment was not as fruitful due to slower growth in values. The average unit delivered about $24,000 in annual equity over the three years.

Realestate.com.au economist Paul Ryan said house owners’ incredible gains in wealth were a boon for the economy.

“Homeowners will utilize that wealth. They’ll spend more knowing their wealth has gone up quickly,” Mr Ryan said. “For many, it’s what unlocks a new car, furniture, holidays or a renovation. It’s the wealth effect. They don’t need to save as much and they spend more as the value of their home rises.”

Homeowners reported some of their recent gains were hard to believe.

Sutherland Shire resident Tim Wany is selling a luxury house in Burraneer he purchased nine months ago and said his agent Alex Pitsis had received offers at $900,000 above the price he paid. It’s still for sale.

Mr Wany made no changes to the coastal property. “It’s a stunning home, but I’m shocked it’s gone up in value like that,” he said.

The Agency’s Paula Simoes said prices for houses in coastal or harbour suburbs were rising the fastest during the Covid pandemic because buyers were seeking out a “better lifestyle”.

“In lockdown, everyone is focusing on the home,” she said. “Families want the beach lifestyle but there is not a lot of stock so we seeing a price difference of sometimes millions in only a few years.”

Gary and Anthea Horton are selling their North Bondi home through agent Paula Simoes of The Agency. Picture: Sam Ruttyn

North Bondi home sellers Anthea and Gary Horton said the market was nothing like when they bought in 2015. “It was a strong market then, but it’s different now,” Ms Horton said.

“It seems like everyone wants this lifestyle … we’ve been very lucky. It’s never really felt like lockdown affected us, we’re seven minutes’ walk from the beach.”

Mr Ryan said the downside to the wealth effect was that it worsened income inequality.

“There will be a bigger gap between the haves and the have nots,” he said. “Those who are trying to get into the market for the first time are finding it harder and there is a need for more government schemes to make it possible for them to buy.”

Ray White chief economist Nerida Conisbee said close to one in five new buyers were borrowing more than six times their income to get into the market.

This house in Pymble recently sold for $3.65m - $1.45m above the 2020 price of $2.2m.

And they would probably not get the same short-term equity gains as those who bought in 2018 or 2019, she said.

“Prices won’t keep growing at the rate they have, they will slow,” Ms Conisbee said. “Typically what happens after a period of rapid growth is that prices begin to stabilise, then there’s a prolonged period of minimal price growth.”

My Housing Market economist Andrew Wilson said low interest rates, which have been the main catalyst for recent rises, would push up prices in 2022 but the growth cycle may end by 2023. “It will reach a point where buyers can no longer afford the prices,” Mr Wilson said. “In some suburbs, it’s already happened.”

Originally published as Sydney real estate: does your home earn more than you?