The huge salary you need to earn to buy a home in Australia

THIS is how much you need to earn to buy a home in each Australian city. And it’s quite a lot.

New data shows you need to earn a massive salary to buy a home in Australia and avoid experiencing ‘mortgage stress’.

DESPITE property prices softening in most Australian cities this year, you still need to earn a mammoth salary to buy a home.

New data shows that would-be buyers have to rake in the big bucks — in some cases six figures — to avoid experiencing mortgage stress.

“Mortgage stress is when 30 per cent or more of your pre-tax income is going towards loan repayments,” Sally Tindall, RateCity.com.au research director, explained.

“Everyone has bills to pay, mouths to feed and kids to educate. People are struggling to make ends meet as it is. When your mortgage repayments tip over that 30 per cent mark, it means you’ll struggle to have spare cash to get you through month-on-month.”

Based on the median house prices in each capital city and the upfront costs required, RateCity.com.au has calculated the annual income needed to purchase either a house or unit.

“Property prices have cooled and that’s good news for first homebuyers, but they still need to earn more than $161,000 a year to avoid mortgage stress in Sydney,” Ms Tindall said.

“That’s an extremely big amount of money. And in Sydney, a 20 per cent deposit plus stamp duty is a whopping $240,000. It’s impossible to collect in a short space of time.”

According to the Australian Bureau of Statistics, people aged 21 to 34 earn an average of $1076.60 per week. That equates to about $56,000 a year.

The number of young Australians who have bought their home has plummeted in recent years.

The skyrocketing cost of property over the past decade has seen the so-called Great Australian Dream slip away for many young people.

The Household Income and Labour Dynamics in Australia (HILDA) survey showed home ownership rates among Australians aged 18 to 39 have plunged to 25 per cent.

“Even for those in this group who manage to buy a home, mortgage debt has risen dramatically,” said Roger Wilkins from the University of Melbourne.

“In 2002, 89 per cent of homeowners in this age range had mortgage debt. By 2014 this had risen to 94 per cent.”

It’s not just property prices that are high — the upfront costs required are massive as well. Picture: AAP

There have been signs of an improvement in first homebuyer activity in a number of locations.

Recent figures show one-in-four homebuyers in NSW are now first-timers, with a tripling in the number of applicants for stamp duty concessions.

There have been positive movements in Melbourne, Adelaide and Brisbane too, as well as major regional centres like Bathurst and Geelong.

Across the country, first homebuyers accounted for 18 per cent of all mortgage commitments in June, which represented the best result since October 2012.

There are signs of improvement in first homebuyer numbers in Australia, thanks in part to falling house prices in many cities.

But barriers to entering the market remain high.

Despite their lower median house prices, the amount required for a deposit and stamp duty in every capital city is above six figures.

“It’s a massive barrier,” Ms Tindall said. “It’s difficult to come up with five figures let alone six figures, particularly when wages growth has stagnated.

“There is hope on the horizon. We’ve seen property prices cool and there are estimates of a drop from peak to trough of upwards of 15 per cent. That will give a lot of would-be first homebuyers a lot of hope.”

Young people live at home longer and are getting into higher levels of debt.

Research shows young Australians are living with their parents for longer, due to the high cost of living, and they’re getting into deeper debt.

A recent report by the Australian Securities and Investments Commission (ASIC) also warns the amount of credit card debt carried by young people is of “particular concern”.

“Young people are more likely to be in delinquency and multiple cards are over-represented,” the ASIC study said.

ANNUAL SALARY REQUIRED TO AVOID MORTGAGE STRESS

Sydney: $161,859 (house) and $121,026 (unit)

Melbourne: $131,830 (house) and $92,280 (unit)

Canberra: $109,624 (house) and $71,528 (unit)

Brisbane: $87,343 (house) and $62,011 (unit)

Adelaide: $75,556 (house) and $53,220 (unit)

Darwin: $82,282 (house) and $50,356 (unit)

Perth: $78,088 (house) and $64,026 (unit)

Hobart: $74,076 (house) and $58,561 (unit)