Digest · World Listens
Treasurer Jim Chalmers announced sweeping tax changes in May that have brought down home prices, without making properties more affordable. Plunging house prices since the May budget were supposed to save Aussie homebuyers — instead, a monster pay rise has become the bare minimum needed just to get the keys to an average home. New modelling has revealed the Great Australian Dream has been hijacked by relentless interest rate rises that have blown the cost of owning property out of the water, even as prices fall.
Everyday workers are now facing an insurmountable wage gap, with bank serviceability tests and punishing monthly repayments requiring paychecks well beyond the household average. Ground zero for the crisis is Sydney, where hopeful buyers must now command $245,000 a year in gross income to clear mortgage stress and secure an average-price property, the Canstar data showed. > See the income you need to buy a home in NSW / Vic / Qld Reserve Bank governor Michele Bullock is expected by many economists to announce one more hike. Picture: Nikki Short That’s if buying a median-priced house at current interest rates following four increases the RBA cash rate this year, which took rates to their highest level in 15 years.
The paycheck pain is marching relentlessly across every capital city in the country, with the average priced Brisbane house now affordable only for those earning $185,000 a year. The same Brisbane house would have been affordable for a $160,000 a year earner last year. That means the typical buyer would have needed a raise of nearly $25,000 in their pay to keep up with changes in the cost of repayments on new homes.
Canstar group manager of research Josh Sale said borrowing costs escalated far faster than property values adjusted downward. “Declining borrowing power means they need a significantly higher salary just to qualify for a loan on a cheaper home, while persistent inflation continues to erode their capacity to save a deposit,” he said. Banks have passed interest rate hikes in full, increasing the required income to buy in most areas.
Master Builders NSW CEO Matthew Pollock said: “We have a ridiculous scenario where house prices are failing at the fastest rate in 40 years, but housing affordability is not improving. “Think about that for a moment ... it (is) harder for people to buy a home, despite tax changes designed to crash house prices. This is all the evidence we need that the Federal Government’s increase in Capital Gains Tax and changes to negative gearing have failed.” Canstar data showed the income now required to afford a purchase in each capital was at extreme levels: QUEENSLAND Pay rise you need to buy homes in Qld suburbs revealed Brisbane couples needed a $30,000-plus pay rise this year just to keep pace with the property market, the data showed.
Brisbane home buyers will need to have secured some of the largest pay rises to keep up with market changes. Picture Lachie Millard It was revealed that the income required to buy a home is rising about eight times faster than wage growth. The average full-time worker’s salary increased by about $3,600 in FY2025–26.
Meanwhile, the income threshold for banks to approve a standard house loan surged by an average of $30,258 in the same period. It means homebuyers would need to work an extra 11 hours every week at the average hourly rate just to cover the 12-month jump in required borrowing power following this month’s interest rate hike. MELBOURNE ‘Out of reach’: Buyers locked out of 62 Melb suburbs Melbourne’s housing market fall isn’t helping buyers, with rising interest rates locking couples hunting the city’s typical home out of 62 more suburbs this year compared to last.
Melbourne affordability has worsened even though prices have been falling sharply. Picture: Nicki Connolly Two-person households earning an income which allows them to afford a typically-priced $960,000 house with a 30-year mortgage, now afford to buy in just 146 suburbs. The same couple would have been able to afford the typical house in 210 areas in October 2025.
According to the analysis from financial comparison website Canstar.com.au, the most affordable locations for purchasers wanting a house in Melbourne are Melton with a $570,000 median value, Melton South at $580,000 and Wyndham Vale at $610,000. SYDNEY Salary needed to crack Sydney’s most popular suburbs revealed A typical Sydney house now requires a pre-tax income of close to $250,000 a year, a nearly $11,000 rise from this time last year. Someone hoping to purchase a median priced unit with a 20 per cent deposit – no small feat at current prices – required an income of about $140,000 a year, a circa $9000 rise from last year.
Auction demand has fallen in Sydney because fewer buyers have the budgets to compete. Picture: Sarah Wilson Loan Market broker Julian Choo said couples with a combined income of about $200,000 was largely the norm for first-home buyers, while an income of $400,000 or over was “extremely rare”. “Most people buying more expensive homes are using equity from an existing property for the purchase or they have an inheritance of the bank of mum and dad behind them,” Mr Choo said.
Canstar’s modelling assumed buyers used a 30-year loan with a 20 per cent deposit, paying principal and interest on a median priced home at the current average lending rate of 6.49 per cent. Borrowing power calculations assumed annual expenses of $24,000 for an individual and $48,000 for a couple, no debts and no dependants, and a 3 per cent interest rate buffer. These calculations measured against home prices recorded last year and the typical lending rates available at the time.
SOUTH AUSTRALIA In order to buy a typical house in South Australia with a 20 per cent deposit, a single person would need to be earning, on average, a whopping $27,646 more than last year before tax. Single buyers needed to earn $167,424 before tax in order to afford a median priced house in Adelaide. Last year that figure was $139,778 Those looking to buy a unit fare slightly better, with an average pre-tax income of $114,741 needed for a median-priced unit.
This is up $17,656 on this time last year.
Source: Real Estate
