Australia’s Housing Crisis: $300,000 Income Required to Afford Mortgages

A general view of properties at North Lakes in Brisbane, Australia, on June 10, 2016. Glenn Hunt/Getty Images

A new study has revealed the harsh reality of housing affordability in Australia, as an average household needs to earn over $300,000 (US$197,000) a year for house prices to be considered “affordable.”

Suburbtrends, a real estate data firm, released a new report analysing 22,000 property sales across Australia in October 2023.

The report (pdf) used the global standard Median Multiple, calculated by dividing the median house price by the median annual household income, to measure housing affordability in major states and territories.

Overall, it found that Australia currently had a Median Multiple of 9.1.

Put differently, the Australian median house price is 9.1 times the median household income.

Meanwhile, the global standard for an affordable housing market is a Median Multiple of 3.0 or less.

“This figure is starkly at odds with the global benchmark,” the report said.

The report also pointed out that if Australia wanted to bring its Median Multiple down to 3.0, a typical household needed to make $301,769 a year—an income that is considered “rich” by most Australians.

Among the capital cities, Sydney was the most unaffordable housing market as the required incomes for some areas ranged between $400,000 and $600,000.

In contrast, Darwin’s housing market was the least demanding, requiring an annual income of $163,000.

Under such conditions, the study found that homeownership was becoming a distant prospect for many Australians, with negative impacts on the middle class and social equality.

“The crisis is not merely one of numbers but of societal values, as the housing market becomes a fortress for the rich, leaving the majority grappling with the uncertainty of rental markets and the dream of home ownership ever elusive,” the report said.

In the face of the housing affordability crisis, Suburbtrends urged policymakers and industry leaders to tackle the issue with a “multipronged approach,” including re-evaluating urban planning, addressing land supply constraints, and improving income growth.

Bank CEO Says Home Loans Are for the Rich

Suburbtrends’ report comes just days after Shayne Elliott, the CEO of ANZ Bank—one of Australia’s big four banks, openly admitted that home loans were now out of reach for many Australians.

“If you want a loan, you have to be better off and essentially rich,” he said.

The CEO cited high inflation and strict lending regulations as the main barriers preventing aspiring homeowners from having their home loans approved.

People are “missing out on getting a home loan, running a business or getting a credit card, not because they’re bad people, but because regulation doesn’t allow banks to lean in and support those people,” he said.

“Is that a society we want?” he asked.

Isabella Rayner contributed to the article.