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There are only five suburbs across Sydney where a couple earning an average income could afford to buy a house, without mortgage stress.
But all of these postcodes are on the city’s fringes either in western Sydney or on the Central Coast. Mount Druitt – 43 kilometres west of the CBD – was the most affordable suburb for couples to buy into at a median price of $633,500, down 5.3 per cent in the year to June on Domain data.
Couples would have more options if they chose to compromise and buy a unit instead, but many would be in far-flung suburbs due to higher interest rates and rising property prices.
Based on official data measuring average weekly earnings, a couple who are paid $95,300 a year each could borrow enough to buy a home worth up to $668,400, Canstar analysis showed.
That assumes they have a 20 per cent deposit and cap their mortgage repayments at 30 per cent of income – the threshold for housing stress.
Buyers could borrow more, if they accept the pressure it would place on the household budget.
Lakemba units were the most affordable options for couples, where the median price was $370,000.
A single person, on the same average weekly earnings, would be able to borrow enough to buy a home worth up to $333,600.
There are no suburbs in Sydney where a single person could afford to buy the median unit without being in mortgage stress.
Canstar group executive Steve Mickenbecker said options were limited for buyers on a budget.
“In Sydney, yes, you’ll get a home well out in the sticks, I guess, but you can’t get a home in Pyrmont or Surry Hills. You won’t get a house anywhere,” he said.
Mickenbecker said it was easier for couples, who could buy a $668,400 house without being in housing stress.
“It’s a whole different ball game. The whole aspect of first homeownership becomes viable,” he said.
“Singles are really up against it, though. In Sydney in particular … They can’t even afford a unit at the median price and up to their limit.”
Home buyers on average incomes would be unlikely to afford many sought-after suburbs.Credit: Peter Rae
Independent economist Saul Eslake said decades of failed housing policy had created an environment where most areas of major cities were unaffordable for average income earners.
“It’s always been the case that there are areas that have traditionally been for first home buyers, the urban fringes,” he said.
“But even in those areas now, they’re beyond the reach of most people on average incomes. You almost always need two incomes to buy.”
Eslake said it was easier for average income earners with access to generational wealth.
“For those people who were sensible to pick their parents carefully, they have an advantage over those who didn’t,” he said.
It comes after the NSW government committed to address housing affordability by ordering part of its $13 billion in budget savings towards the issue this week, but it is unclear how it will deliver a solution.
First home buyer Rowena Fernando purchased an Oxley Park house with a modest backyard last month after searching on and off for three to four years.
She said she would have had little chance of being able to buy closer to her work in Macquarie Park as an engineer in the medical device industry, where it would have been difficult to afford a property.
Rowena Fernando has bought her first home in Oxley Park after looking to buy a home for three to four years.Credit: Wolter Peeters
“It is a little bit far from where I need to be in terms of work and everything, but it’s something I’m willing to sacrifice in terms of my first home,” she said.
“I didn’t want an apartment, I wanted something with land.”
Peter Diamantidis from Ray White Diamantidis Group said Oxley Park had turned from an investor suburb to an attractive entry-level market for first home buyers.
“They’re technically being pushed out into this direction because that’s all they can afford,” Diamantidis said, noting most buyers were couples.
The suburb’s median house price of $655,000, had risen 2.2 per cent in the year to June.
Diamantidis thought the median had since risen by $10,000 to $15,000 and would increase once Sydney’s second airport opens.
McGrath Hornsby’s Adam Gillbanks said Hornsby, which has a median unit price of $666,000, had grown in popularity among first home buyer couples because of its popular schools and direct north shore train line into the CBD.
“I have started noticing this year that prices have started to creep back up again,” Gillbanks said. “I wouldn’t say it’s affordable.
“They’re still stretching themselves. They can potentially buy two bedroom units in Hornsby whereas if they’re further down the north shore train line they would [only] be able to afford a one-bedroom unit.”
With Elizabeth Redman
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