Why that home you could afford in 2018 is now a fantasy - with Aussies urged to buy now before it's too late
The average Aussie can no longer afford the typical big city house they could seven years ago after property price rises soared at triple the pace of wages.
Record-low interest rates during Covid followed by record-high immigration levels have caused house prices to climb by double-digit figures in some years.
Across Australia, prices have surged by 56 per cent since 2018 but in Brisbane, house values have soared by 86 per cent and almost doubled in Adelaide.
By comparison, overall wages have increased by just 18.6 per cent - or a third the level of property price increases.
Finder personal finance expert Sarah Megginson said entry level prices were only likely to keep soaring, despite the high levels of mortgage stress.
'Demand – especially in affordable markets – is expected to surge, which could potentially push entry-level prices even higher and squeeze first home buyers further,' she said.
Back in 2018, Australia's middle home price covering houses and units stood at $532,327, CoreLogic data showed.
With a 20 per cent deposit, the average, full-time worker earning $83,486 was at a pinch able to get a loan and borrow five times their salary before tax.
Seven years later, Australia's median home price now stands at $831,288.
Someone earning the new average, full-time salary of $102,742 with the equivalent deposit would now have to borrow 6.5 times their income - putting them in the severe mortgage stress territory.
The banks are reluctant to lend a prospective borrower more than five times their pay, with the Reserve Bank's two rate cuts in 2025, so far, hardly undoing the 13 increases in 2022 and 2023.
The 3.85 per cent cash rate is the lowest since June 2023 but is still a far cry from the Covid record low of 0.1 per cent.
Lower interest rates increase borrowing capacity, but they also put up house prices.
Sydney, Australia's most expensive property market with the biggest inflow of overseas migration, has seen its mid-point house price climb by 49 per cent since mid-2018, with prices rising from $998,270 to $1.486million.
But in Brisbane, house prices have soared by a whopping 85.7 per cent from $538,693 to just over $1million in a city with a large influx of interstate migration.
Record-low interest rates during Covid followed by record-high immigration levels caused house prices to climb by double-digit figures during some years (pictured is a Sydney auction)
Perth prices have soared by 69 per cent from $481,612 to $813,810, in another city with strong population growth from other parts of Australia.
Adelaide house prices have almost doubled, surging by 89.3 per cent from $465,992 to $882,157.
Melbourne, however, is the exception to other major capital city markets with its mid-point house price climbing by just 15.6 per cent from $813,064 to $939,965.
This was the only big capital city where house prices increased at a pace slower than wages growth.
What if I'm single?
Single Australians earning the average wage were able to buy the median-priced house in most capital cities, except Sydney and Melbourne, less than a decade ago.
But that's dramatically changed with only working couples now having a chance in most capital city markets.
A Finder analysis revealed South Australia has seen the biggest decline since 2017, going from having 85 per cent of suburbs being affordable for singles to 19 per cent.
The ratio in Western Australia has fallen from 67 per cent to just 17 per cent.
In Queensland, it's plunged from 66 per cent to 19 per cent.
New South Wales, which was an overpriced market eight years ago, saw the proportion of affordable suburbs fall from 40 per cent to 11 per cent.
Despite weak price growth in Melbourne, the proportion of affordable suburbs in Victoria had declined from 50 per cent to just 16 per cent.
'Buying a home is harder than ever, especially if you're trying to do it on your own without a partner or family member,' Ms Megginson said.
'First home buyers are not expecting to step into a mansion for their first property, but even those with realistic expectations are shocked that even entry-level homes carry eye-watering price tags.'
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