You now need to earn over $200k to afford a home,
Even households in Queensland earning $200,000 are finding it difficult to manage mortgage payments without support from family members.
Recent figures reveal that housing affordability is currently at its worst level since the Global Financial Crisis, or GFC.
Low-income earners have become completely excluded from the housing market throughout the state, highlighting a severe affordability crisis.
Additionally, the time required to save for a mortgage deposit in Queensland has reached its longest duration on record.
According to PropTrack’s 2024 Housing Affordability Index, these trends illustrate the escalating challenges faced by potential homebuyers in the region.
The findings released today indicate that a median-income household with a mortgage in Queensland can afford only 15 out of every 100 homes.
This marks the lowest affordability rate since 2008, reflecting significant challenges in the housing market.
Renting households are facing even greater difficulties, as they can currently afford only one in ten homes available for sale.
Households earning $200,168 can only purchase half of all the homes currently listed for sale in Queensland.
To own nearly all properties available right now, an annual income of $639,461 is necessary, underscoring the affordability crisis.
For households earning $89,438 annually, entering the housing market is nearly impossible, with only one in ten homes being affordable.
According to PropTrack’s senior economist Angus Moore, it takes just under five and a half years to save a 20% deposit.
This duration represents the highest level ever recorded for Queensland’s median-priced homes, demonstrating the challenges faced by average income households.
Moore emphasizes that significant wealth is now required for first-time buyers to break into the market.
This need for wealth is especially critical given the rapid rise in home prices observed in Queensland over recent years.
Furthermore, Mr. Moore stated that housing affordability in Queensland is currently the worst it has been in 17 years.
He noted that affordability has “deteriorated really rapidly” since the onset of the pandemic, exacerbating existing issues.
“That said, affordability in Queensland is still slightly better than what we observed during the peak of the mining investment boom in 2008.
During that time, Queensland became quite expensive, and interest rates were significantly high in 2007 and 2008—more so than today,” he explained.
He noted that while affordability is not the worst on record, it is approaching that concerning period.
The Index evaluates the proportion of homes affordable for purchase across various income levels, locations, and tenure types.
This assessment uses data that dates back to 1995, providing a comprehensive view of housing trends.
It discovered that the cost of mortgage repayments for a new home in Queensland has risen by 50% in just two years.
As a result, mortgage repayments now constitute one-third of an average household’s income, highlighting the growing affordability issue.
Mortgage stress is typically defined as a situation where 30 percent or more of a household’s income is spent on mortgage repayments.
Mr. Moore stated that addressing stamp duty reform could help release some housing stock for better utilization in the market.
“Stamp duty represents a significant expense that discourages individuals from downsizing or relocating to more suitable areas,” he explained.
This reform would not only assist homeowners but is also something governments should consider implementing for broader housing benefits.
According to Mortgage Brokers AU CEO Shaun McGowan, high living expenses and public transport costs make Brisbane the most challenging capital city for saving a home deposit.
“Public transport costs are particularly steep, averaging $197.35 per month, which further reduces disposable income for residents,” Mr. McGowan noted.
While saving for a deposit may take longer, the lifestyle and amenities available in Brisbane present a compelling reason to reside there.
The latest PropTrack Home Price Index revealed that home prices in Brisbane have increased by nearly 14 percent over the past twelve months.
“Brisbane has experienced remarkable growth over the past few years, successfully avoiding the interest rate-induced price declines seen in other areas,” said PropTrack senior analyst Karen Dellow.
“In fact, Brisbane has even surpassed Melbourne, becoming the second most expensive city in Australia due to this growth.”
“Double-digit growth in purchase inquiries has led to competitive market conditions in Brisbane, resulting in prices reaching unprecedented heights.”
“Furthermore, higher interest rates have decreased borrowing power, and with prices continuing to rise, affordability constraints are pushing buyers towards units.”
This trend is evident across Australia’s capital cities, as many individuals seek more affordable housing options in light of rising costs.
Even purchasing a block of land has become significantly more expensive, contributing to the overall affordability crisis faced by buyers.
New research from Oliver Hume indicates that the average price of a block of land in southeast Queensland is now $380,640.
This price has increased by 11 percent over the three months leading up to the end of June.
Additionally, it rose by 14.3 percent over the twelve months ending in June, reflecting a significant upward trend.
The average price of land increased by nearly $38,000 during the most recent quarter, highlighting rapid growth in the market.
Julian Coppini, the chief executive officer of Oliver Hume, stated that prices across southeast Queensland have steadily climbed in recent years.
He also noted that prices are expected to continue rising as the population increases in the region.
“The southeast Queensland market is among the strongest in the country, and we do not anticipate any changes soon,” he added.
The latest ANZ Housing Affordability Report reveals that the gap between Melbourne and Brisbane’s median home prices has widened considerably.
Now, Brisbane is becoming much less affordable compared to Melbourne, affecting potential buyers’ decisions in both cities.
ANZ economist Madeline Dunk mentioned that Melbourne is gaining an affordability advantage over other capital cities, offering a silver lining for buyers.
In March 2020, the median home price difference between Melbourne and Brisbane was 36.6 percent, but it has shifted significantly.
As of August 2024, the median home price in Melbourne is now 11.3 percent lower than in Brisbane.
“Melbourne residents who once considered moving to Brisbane for better affordability and warm weather may now reconsider their options,” Ms. Dunk said.
These changing dynamics could slow interstate migration from Victoria and attract more people back to Melbourne, potentially leading to price increases.
