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How much you need to earn to buy property in Canberra

By Canfan - 17 August 2015 32

Map-Salary-for-Median-Priced-House

If you want to buy the median-priced home in Canberra’s most expensive suburb for 2014, you’ll need an annual salary of $116,500.

(The suburb is Griffith, and the median house price is $1.005 million.)

New research by real estate agent comparison service Which Real Estate Agent has revealed how much you need to earn to buy in Canberra, as well as in other Australian capital cities.

Some of the findings are interesting, so we’ll share a couple of relevant local insights here.

To buy the median-priced Canberra home, you need to earn $73,000 per year. That’s almost on par with the national average – the median-priced Australian home requires an annual salary of $73,500.

As you might expect, buying in suburbs like Griffith, Yarralumla and Deakin require higher annual salaries:

  • Griffith: $116,500
  • Yarralumla: $134,200
  • Deakin: $112,000

But if you think that’s expensive, spare a thought for our neighbours up the Federal Highway. To buy the median-priced home in Sydney’s Point Piper, for example, a homebuyer needs to make at least $1.169 million per year.

In Bondi Beach? $235,000.

Darlinghurst? $162,000.

In fact, you probably need to earn more than six figures just to enter Sydney’s property market, where the median-priced home requires an annual salary of $106,000.

The good news is that isn’t the case in Canberra. The median-priced Charnwood home, for example, requires an annual salary of $54,700. In Wright, you need $69,000. This figure is a bit of a surprise, as Wright isn’t considered an affordable suburb by many (though a reader has pointed out that the low median price in Wright is likely because it doesn’t include the sale of land).

According to Which Real Estate Agent, these calculations assume that a homebuyer is single, puts down a 20 per cent deposit and has annual expenses equal to $17,907 (the definition of the poverty line). There’s some more info in the table below.

Screen Shot 2015-08-16 at 4.20.18 pm

Do these findings surprise you? 

Are Canberra property prices still too expensive?

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32 Responses to
How much you need to earn to buy property in Canberra
wildturkeycanoe 7:38 am 18 Aug 15

VYBerlinaV8_is_back said :

Canberra property has been getting cheaper in real terms for several years.

The blocks are small, expensive, and typically poorly located.

To your first comment, no, land has not become cheaper. Rates notice shows increases every year. The apparent drop in prices is due to your second comment. They are simply making the blocks tiny and charging a bit less than before for full sized 600m2 blocks. Developers must be raking it in, while new home buyers get slugged with massive building costs. Why can’t we drop transportables onto land here, they are much cheaper? Oh right, builders have their hands in the government’s pocket.

Masquara 8:35 pm 17 Aug 15

Maya123 said :

I managed to buy my first house, by renting out the two spare bedrooms for several years. I would have struggled otherwise, as my income was not that high. Doing that I even managed to pay off the home loan years earlier. That was in the years before land tax, so now someone doing that might find it is not so easy, because land tax is (wrongly) not based on rental income, but land value, ie. two houses side by side; one house getting twice the rent of the other, but they both pay the same land tax.

Weren’t you in a guvvie? Or is that another Maya on this site?

dungfungus 6:47 pm 17 Aug 15

arescarti42 said :

watto23 said :

This is what happens when government policies at a local and federal level favor maintaining property prices over affordability. When I bought my place, I earnt per annum a third of the houses value. Now its closer to wage being 1/8 of the houses value.

+1

I could not afford to buy a house now, but it was easily manageable on my salary fresh out of uni 15 odd years ago. No government is going to actually make changes necessary because far too many people will lose out. Investors, superannuation funds and even home owners really don’t want to see a drop in the value of their home and property. You can’t hand out first home owner grants because it puts upward pressure on prices, so the houses are just more expensive.

It goes to show how greedy and selfish Australians are. Most are more than happy to sell out their children’s’ future, and deny them the opportunities they enjoyed if it means they can get rich without actually having to work for it.

And when they get rich and die who gets their wealth?
Without working for it, too!

arescarti42 5:19 pm 17 Aug 15

VYBerlinaV8_is_back said :

Considering a third of Australians live in rented accommodation, and this hasn’t really changed for several decades, I’d say that yes, this is fairly normal.

Whilst the overall rate of home ownership may not have fallen all that much, the aggregate figure masks a collapse in the home ownership rates of young people, and unchanged or rising levels of older cohorts.

For example, between 1982 and 2011, the rate of home ownership for those aged 65 years and older increased from 75% to 81%, while for those 25-34 years old, it fell from 56% to 34%.

The housing hyperinflation of the last 20 years is a social and economic disaster in the making.

Maya123 4:56 pm 17 Aug 15

I managed to buy my first house, by renting out the two spare bedrooms for several years. I would have struggled otherwise, as my income was not that high. Doing that I even managed to pay off the home loan years earlier. That was in the years before land tax, so now someone doing that might find it is not so easy, because land tax is (wrongly) not based on rental income, but land value, ie. two houses side by side; one house getting twice the rent of the other, but they both pay the same land tax.

chewy14 4:53 pm 17 Aug 15

arescarti42 said :

So to buy a middle of the road house in Canberra, you need to be on an above average wage, devote ~60% of your income to your mortgage, live on the poverty line, and don’t even think about what happens when interest rates rise from record low levels.

Riiiiiiiiiight, no problem here!

There’s no way you could afford those properties on those wages without extreme difficulty coming up with the deposit and then extreme risk of defaulting on the loan.

VYBerlinaV8_is_back 3:30 pm 17 Aug 15

arescarti42 said :

So to buy a middle of the road house in Canberra, you need to be on an above average wage, devote ~60% of your income to your mortgage, live on the poverty line, and don’t even think about what happens when interest rates rise from record low levels.

Riiiiiiiiiight, no problem here!

Considering a third of Australians live in rented accomodation, and this hasn’t really changed for several decades, I’d say that yes, this is fairly normal.

Of course housing is more expensive than in times past, but people also have more disposable income and standards of living are much higher. Interest rates are also lower, and the price of many other things is lower too.

I’m not suggesting it’s a good or bad thing, it’s simply how it is at the moment. Over time, it will likely change.

arescarti42 3:13 pm 17 Aug 15

watto23 said :

This is what happens when government policies at a local and federal level favor maintaining property prices over affordability. When I bought my place, I earnt per annum a third of the houses value. Now its closer to wage being 1/8 of the houses value.

+1

I could not afford to buy a house now, but it was easily manageable on my salary fresh out of uni 15 odd years ago. No government is going to actually make changes necessary because far too many people will lose out. Investors, superannuation funds and even home owners really don’t want to see a drop in the value of their home and property. You can’t hand out first home owner grants because it puts upward pressure on prices, so the houses are just more expensive.

It goes to show how greedy and selfish Australians are. Most are more than happy to sell out their children’s’ future, and deny them the opportunities they enjoyed if it means they can get rich without actually having to work for it.

arescarti42 2:06 pm 17 Aug 15

So to buy a middle of the road house in Canberra, you need to be on an above average wage, devote ~60% of your income to your mortgage, live on the poverty line, and don’t even think about what happens when interest rates rise from record low levels.

Riiiiiiiiiight, no problem here!

Ezy 2:03 pm 17 Aug 15

VYBerlinaV8_is_back said :

Ezy said :

VYBerlinaV8_is_back said :

The thing that surprises me is people building new in ACT. The blocks are small, expensive, and typically poorly located.

Exactly. For the last two weeks we have been looking at land to build simply because we aren’t finding the right house at the moment. We did some sums on buying land, then building, then looking at how much yard we would be left with on a block where the house next door would cut most of the north facing light out – no thanks.

Depending on your finances, you might find the best result is to purchase an older home then do some renovating, resulting in a modernised property in a good location at an acceptable price. Good luck!

Thats what we have decided on – just that right home that will respond well to the renovations we have planned is hard to find. It will come along one day.

watto23 2:02 pm 17 Aug 15

This is what happens when government policies at a local and federal level favor maintaining property prices over affordability. When I bought my place, I earnt per annum a third of the houses value. Now its closer to wage being 1/8 of the houses value.

I could not afford to buy a house now, but it was easily manageable on my salary fresh out of uni 15 odd years ago. No government is going to actually make changes necessary because far too many people will lose out. Investors, superannuation funds and even home owners really don’t want to see a drop in the value of their home and property. You can’t hand out first home owner grants because it puts upward pressure on prices, so the houses are just more expensive.

I can only think of two things, either high interest rates or a recession will lower houses. It would also be good if at least some laws making changes to negative gearing are made, even if it is grandfathered and changed to neutral gearing (ie only claim expenses against income earnt from the property).

VYBerlinaV8_is_back 1:46 pm 17 Aug 15

Ezy said :

VYBerlinaV8_is_back said :

The thing that surprises me is people building new in ACT. The blocks are small, expensive, and typically poorly located.

Exactly. For the last two weeks we have been looking at land to build simply because we aren’t finding the right house at the moment. We did some sums on buying land, then building, then looking at how much yard we would be left with on a block where the house next door would cut most of the north facing light out – no thanks.

Depending on your finances, you might find the best result is to purchase an older home then do some renovating, resulting in a modernised property in a good location at an acceptable price. Good luck!

Ezy 12:43 pm 17 Aug 15

VYBerlinaV8_is_back said :

The thing that surprises me is people building new in ACT. The blocks are small, expensive, and typically poorly located.

Exactly. For the last two weeks we have been looking at land to build simply because we aren’t finding the right house at the moment. We did some sums on buying land, then building, then looking at how much yard we would be left with on a block where the house next door would cut most of the north facing light out – no thanks.

VYBerlinaV8_is_back 12:29 pm 17 Aug 15

Canberra property has been getting cheaper in real terms for several years. I’d say we’re within 2 years of the bottom of this cycle, after which you can expect another price rise. Some suburbs are already starting to increase, and more property is selling now compared with last year. Of course, if you want a unit in a new development, some low-balling could yield a good result.

The thing that surprises me is people building new in ACT. The blocks are small, expensive, and typically poorly located.

Lazy I 7:55 am 17 Aug 15

That Wright figure is completely misleading because of the number of homes advertised there that don’t include land. Jump on allhomes and take a look at the ~450k ads that are for house only. These sellers all push the government’s ‘land rent’, and these houses are actually closer to 850-900k when land is included.

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