What income you need to earn to own in every Melbourne suburb
The income you need to afford a home in any Melbourne suburb and not be in mortgage stress may alarm you. SEE WHAT YOUR SUBURB COSTS
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You can’t afford to pay off an average house without being under mortgage stress in any Melbourne suburbs without taking home more than $90,000 each year.
And in only Melton and Melton South can you do so with less than $100,000 after tax annually, at about $94,000 and about $95,000 respectively.
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Finder.com.au analysis provided exclusively to News Corp shows just how dire the homeownership situation is across the state, revealing how much is needed to safely service a mortgage on a median-priced house and unit in every suburb.
Despite price falls, things have only gotten worse; with maximum borrowing capacity already decreasing more than 20 per cent as interest rates rise at their fastest rate in 30 years.
The decline of Melbourne’s median property price stalled in October, according to PropTrack’s Home Price Index, after shedding 4.75 per cent from its March peak to now sit at $805,000.
But further falls are still expected as interest rates, the noted biggest factor, continue to increase.
It comes as leading data firm Moody’s Investors Service declares mortgage delinquencies will increase over the next year because of rate rises, cost of living pressures, and property price falls.
Inflation is not expected to be back within the Reserve Bank’s target until 2025, and Treasury predicts retail electricity prices will jump 30 per cent in 2023-24, eclipsing a 20 per cent rise in the average household power bill in the current financial year.
Households that spend more than 30 per cent of their income on housing costs are considered to be in mortgage stress, and Finder.com.au head of consumer research Graham Cooke said the salaries required to own property painted a “grim” picture of deteriorating affordability.
“The costs of living are increasing faster than people’s salaries and housing is the biggest component of that. A lot of households are struggling,” he said.
“Australia escaped the global financial crisis to a degree, so this is really the first time it’s in this kind of situation.”
PropTrack senior economist Eleanor Creagh said the 2.75 per cent cash rate hike since it was first lifted in May was the fastest rise since 1994 and had “quickly rebalanced the housing market from last year’s extreme growth levels”.
On Tuesday, the RBA raised the cash rate another 0.25 per cent. It’s now 2.85 per cent.
“The RBA appears done with front-loading the tightening cycle, now slowing the pace of its hikes. This may also give prospective buyers a confidence boost, along with the increased choice available compared to this time last year,” she said.
“From here, further rate rises will increase borrowing costs and reduce maximum borrowing capacities, weighing on prices.”
Ms Creagh said tight rental markets and rental price pressures, foreign migration, low unemployment and housing supply pressures would help hold prices up.
Finder’s metric used an interest rate of 5.95 per cent, the most recent home loans owner occupier variable discounted rate as supplied by the Reserve Bank of Australia, a loan to value ratio of 80 per cent and a loan term of 30 years.
The data shows owning your own house as a single person has been all but wiped out for average Victorians — and it’s become enormously difficult even when pairing up.
Property Home Base buyer’s advocate Julie DeBondt-Barker said most first-home buyers she dealt with still preferred to move further out to get a house or villa unit than buy an apartment, but there had been “a little bit” of a shift to entering the unit market instead.
“It really is case-by-case depending on how portable their job is, but if they’ve got a portable job and don’t have to be in the CBD they do tend to prefer to move out a bit, to get a house or even a villa unit, for a little bit of space and just for that little backyard,” she said.
Half of Melbourne’s suburbs (212 out of 414 in the list) require $200,000 to be taken home annually for houses.
The average full-time adult salary in Victoria is about $90,000 a year, before tax, according to the Australian Bureau of Statistics.
Hocking Stuart Melton director Damien Spiteri said cost of living and interest rate rises had “put some fear in the marketplace”.
“But I think Melton just takes that fear away, it’s always good value and affordable,” he said.
The area does not get the astronomical growth, and then steep falls, of other suburbs, but grows sustainably with retained interest from first-home buyers and investors for its affordability and future infrastructure.
Melbourne’s top 10 most affordable suburbs for houses, according to the data, were Melton, Melton South, Coolaroo, Dallas, Kurunjang, Meadow Heights, Wyndham Vale, Brookfield, Harkness and Weir Views.
There were 34 suburbs where the unit market was affordable for those taking home less than $100,000, and 15 for less than $90,000.
Travancore was the most affordable unit market in Melbourne at $64,315, followed by Melton South ($67,780), and Melton ($72,940). These were the only ‘burbs beneath $80,000.
Melbourne’s most affordable suburbs for paying off a house or unit
Suburb, Median price, Monthly Repayments (80% LVR, 5.95% rate), Minimum income after tax required
HOUSES
MELTON, $490,465, $2,340, $93,595
MELTON SOUTH, $496,142, $2,367, $94,678
COOLAROO, $530,243, $2,530, $101,186
DALLAS, $547,121, $2,610, $104,406
KURUNJANG, $548,014, $2,614, $104,577
MELTON WEST, $552,733, $2,637, $105,477
MEADOW HEIGHTS, $574,575, $2,741, $109,645
WYNDHAM VALE, $581,158, $2,773, $110,902
BROOKFIELD, $582,485, $2,779, $111,155
HARKNESS, $583,068, $2,782, $111,266
WEIR VIEWS, $590,935, $2,819, $112,767
UNITS
TRAVANCORE, $337,032, $1,608, $64,315
MELTON SOUTH, $355,189, $1,695, $67,780
MELTON, $382,228, $1,824, $72,940
ESSENDON NORTH, $428,607, $2,045, $81,790
WERRIBEE, $434,239, $2,072, $82,865
NOTTING HILL, $425,642, $2,031, $81,225
BACCHUS MARSH, $444,626, $2,121, $84,847
ALBION, $447,107, $2,133, $85,321
CRAIGIEBURN, $448,537, $2,140, $85,594
HOPPERS CROSSING, $451,555, $2,154, $86,170
Source: Finder.com.au
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