What you need to earn to buy in every Victorian suburb

An after-tax income of more than $200K is now needed to buy, and own stress-free, in more than 120 Victorian suburbs and towns. See what you need to earn to buy where you want.

Young Werribee family Bhavani Mohan, Hariprasath Ravi and Tishan Hariprasath (1) outside their new Werribee home, which they bought in November. Picture: Rob Leeson

An after-tax income of more than $200,000 is now needed to buy, and service a mortgage stress-free, in more than 120 Victorian suburbs and towns.

Of those, 39 housing markets are only open to purchasers with an annual household income of more than $300,000 after they’ve paid taxes, exclusive research by Finder and CoreLogic reveals.

It comes as national housing affordability has plummeted to its worst level on record, with CoreLogic research director Tim Lawless noting “the gap between income and prices has never been this large”.

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“It’s a cumulative phenomenon that’s getting worse over time,” he said.

A household needs to rake in $694,008 annually, after tax, to snare a typical Toorak house, with Brighton not far behind at $543,085, according to Finder and CoreLogic.

The required earnings for a median-priced Deepdene house are just shy of half a million dollars, with the figure also exceeding $400,000 for Portsea, Canterbury, Middle Park, Hawthorn, Balwyn and Kew.

The research assumes a household is presenting a 20 per cent deposit, will have a 30-year mortgage at the average owner-occupier discounted variable rate of 3.45 per cent, and that it will avoid mortgage stress with repayments costing no more than 30 per cent of the monthly income.

No. 6 Miller St, Murtoa, is for sale for $249,000.

In regional Victoria, an annual after-tax income of $306,751 is required to buy into coastal town Fairhaven. On the flip side, earnings of just above $23,000 a year are needed to purchase in northwest Victorian towns Murtoa and Ouyen.

A typical house in Melbourne’s cheapest suburb, Melton, is attainable for any household earning more than $67,649 annually, with Coolaroo ($75,924) and Kurunjang ($76,498) the next most achievable.

No. 29 Yuille St, Melton, is on the market for $479,000-$519,000.

Despite retaining a sprinkling of affordable suburbs, Melbourne was becoming “overvalued” relative to what people earned, Mr Lawless said.

Nationally, housing costs had grown annually at double the rate of wage increases over the past decade and a typical Aussie home was now almost eight times the annual median household income.

No. 20 Yandanah Rd, Fairhaven, is priced at a hefty $4m-$4.4m.

This was unprecedented and meant first-home buyers today faced more barriers than their parents – even those who bought in the late 1980s, when interest rates were 17 per cent.

Mr Lawless said saving the high sums needed for deposits and stamp duty was typically the biggest challenge, but mortgage serviceability was also an issue, despite record-low interest rates.

Finder’s senior editor of money Sarah Megginson agreed, noting high housing prices had pushed many people to buy beyond their means.

“Interest rates (will) need to rise at some point, and unfortunately this means some Aussies are at risk of defaulting on their home loans,” she said.

Welcome to Toorak. 62B Hopetoun Rd is on the market for $22m-$24.2m.

“Ideally, you don’t want to spend more than 30 per cent of your salary on home loan repayments. It’s good to give yourself a buffer for when rates inevitably rise.”

Area Specialist Wyndham City director Harry Singh said his patch – comprising suburbs like Werribee, Hoppers Crossing and Wyndham Vale – offered some of the city’s best value houses.

“Prices are going up because there is more competition, but it’s still very affordable compared to other parts of Melbourne,” he said.

The fact it was still possible to secure “a three-bedroom house with a bit of a backyard” for less than $600,000 made the area particularly popular with first-home buyers seeking stamp duty exemptions.

Mr Singh said access to improving amenities was another major drawcard, with train stations and schools at the top of buyers’ lists.

Werribee residents Bhavani Mohan and Hariprasath Ravi would not have been able to nab such a large house in most other parts of the city. Picture: Rob Leeson

Plans for a new private school lured Hariprasath Ravi and Bhavani Mohan to Werribee’s Riverwalk Estate, where they recently bought a five-bedroom house with one-year-old son Tishan’s future in mind.

While the family spent about $1m, Mr Ravi noted he would not have found such a large house for that price in most other parts of Melbourne.

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