Analysis of ABS dwelling price data by financial comparison site Mozo has revealed that someone on the average wage in New South Wales would need to spend 82 per cent of their monthly earnings to pay for the average mortgage in the state – well beyond the 30 per cent used as the typical measure of whether someone is in housing stress.
But that's only pre-tax dollars; once tax is taken into account, those same mortgage repayments require 106 per cent of what someone on the average income takes home.
That effectively means a single person or a household with only one income are completely priced out of the property market in the nation's most populous state.
"It's becoming increasingly clear that without substantial financial support or creative co-buying solutions, the dream of homeownership for singles is slipping further out of reach," Mozo personal finance expert Rachel Wastell.
"Many are now being forced to reassess their living arrangements, either by postponing their dreams of homeownership or considering alternatives."
While not as hopeless as in NSW, the picture across the rest of the country isn't much better.
The national average dwelling price of $959,300 requires monthly mortgage repayments of about $5300, or 84 per cent of monthly post-tax earnings.
Victoria only lags behind NSW for unaffordability, with 81 per cent of post-tax income required to service the average home loan, followed by the ACT and Queensland (both 76 per cent), South Australia (72 per cent), Tasmania (64 per cent) and Western Australia (61 per cent).
The Northern Territory (46 per cent) is the only state or territory in the country where the measure falls under 50 per cent.
"With skyrocketing home prices and rising interest rates, the proportion of income needed to service a mortgage is at a record high, making it increasingly unlikely that singles can afford to buy a home on their own," Wastell said.
But it wasn't always the case.
Back in the early 1980s, the price-to-income ratio was sitting at around 3.3, according to the Parliamentary Library – that is, Australia's median home price home was 3.3 times the size of the average disposable income.
In 2015, it had more than doubled to around 7.
By then, Mozo's analysis shows that only about half (55 per cent) of post-tax earnings from the average national wage was enough to cover mortgage repayments for the average Australian home – although it was still notably higher in NSW at 68 per cent.
That measure actually dropped steadily from mid-2017, reaching a decade-low of 48 per cent nationally and 61 per cent in NSW in the early days of the pandemic.
Sydney suburbs where housing prices don't drop below $3.9 million
But with property prices rising it surged in early 2021, and then skyrocketed as interest rate rises took hold from mid-2022, pushing it to the point where average-income earners are now all but priced out of the housing market.
"With home loan repayments consuming such a significant portion of average monthly earnings, it's becoming almost impossible for singles to secure a property without substantial savings or additional financial support," Wastell said.
"In NSW, where the mean dwelling price is over $1.2 million, an average single earner would need to spend 82 per cent of their income on their mortgage repayments."
"This is clearly unsustainable and indicates that homeownership is increasingly the domain of dual-income households."
