MEDIAN HOUSE & APARTMENT PRICES
TRENDS
PASSING THE MORTGAGE STRESS TEST
HOUSE
APARTMENT
GROSS HOUSEHOLD INCOME REQUIRED*
HOBART
$330K
$280K
SYDNEY
ADELAIDE
$430K
$350K
Inner ring
$268K
BRISBANE
$482K
$382K
Middle ring
$197K
PERTH
$520K
$415K
Outer ring
$104K
DARWIN
$580K
$450K
CANBERRA
$588K
$415K
MELBOURNE
MELBOURNE
$620K
$475K
Inner ring
$156K
SYDNEY
$900K
$670K
Middle ring
$118K
Outer ring
$75K
Source: CoreLogic RP Data August 2015
THE McGRATH REPORT
BRISBANE Inner ring
$114K
Middle ring
$84K
Outer ring
$65K
The Manhattan effect “It’s almost like the Manhattan effect. You only attract rich people on to the Manhattan island, and the rest live out in Brooklyn. Should a global city like Sydney really offer a place for everyone? That’s a social question.”
Sydney’s inner ring now has a median house price above $1.5million and the middle ring above $1.0million, making the zone within 20km of the CBD too expensive for more than 90% of Australians based on their ability to service loans beneath the widely recognised mortgage stress test of 30% of household income^.
- Social demographer Bernard Salt, SMH June 2015
Figures compiled by CoreLogic RP Data show a rising Manhattan effect, with Sydney’s inner ring increasingly becoming the exclusive domain of high income earners. Household incomes of around $270,000 pa in the inner ring and $195,000 pa in the middle ring are required to service a typical loan.
coastal regions will become increasingly attractive to the rising number of Gen X middle income earners who are tired of Sydney’s higher cost of living (see page 7), and the next generation of families among the more nimble, lifestyle-focused Gen Y. Australian Bureau of Statistics data already shows an increasing number of Sydneysiders migrating to nearby commuter seachange locations while others are heading to Melbourne. Melbourne’s population has been growing faster than Sydney’s since 2000 and in two out of three models used by the ABS to project future populations, Melbourne will overtake Sydney in either 2030 or 2053.
Even Sydney’s less expensive outer ring requires a household income above $100,000 for most people to avoid mortgage stress. That being the case, we believe as big cities become less affordable, many families will consider regional locations within a 90 minute commute from nearby cities. Melbourne, Brisbane and NSW
^ Calculations based on most recent ABS Household Income and Income Distribution report (2011-12). Mortgage data supplied by oxygen.com.au based on 80% LVR Principal & Interest loans over 30 years at today’s discounted standard variable mortgage rate of 4.75%. Mortgage stress is widely recognised as using more than 30% of gross household income on housing costs. †
2
Source: CoreLogic RP Data April 2015. Based on lowest median house & apartment values within 10km of the CBD.
* Median gross household income required to pass the mortgage stress test of no more than 30% of income used to cover home loan repayments. Based on median priced houses (80% LVR Principal & Interest Loan over 30 years at 4.75%)