Bleak outlook for Melbourne’s home buyers revealed
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Loading... - Joshua Campbell
- 22 Mar 2023
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First home hopefuls are finding it tougher to get into the property market, as skyrocketing mortgage repayments outweigh the benefit of falling house prices.
A Melbourne couple on an average wage would need to pay 42.1 per cent of their combined income to repay a loan on an entry-level house they bought for $660,000, modelling from Domain’s First Home Buyer Report, released on Tuesday, shows.
That’s well above the 28.2 per cent of income recorded in last year’s report and also above the 30 per cent threshold that places homeowners in mortgage stress, meaning not everyone might qualify for a loan that large.
Someone who bought an entry-level unit priced at $412,566 was marginally better off, spending 26.3 per cent of their incomes on mortgage repayments. But the percentage has increased from 18.9 per cent last year.
The modelling assumes a couple aged 25 to 34 years old who earn the average income for that age bracket and save 20 per cent of their post-tax income towards a home at the 25th price percentile.
Domain chief of research and economics Dr Nicola Powell said the affordability conversation has flipped this year, because mortgage repayments have become a bigger issue than saving for a deposit as house prices fall.
When house prices boomed, saving for a deposit was the main challenge for first home buyers. But Melbourne’s house prices dropped by 5.6 per cent in 2022 to a median $1,032,903, according to Domain data.
“That pull back in house prices we have seen hasn’t been enough to outweigh the amount needed to service the debt,” Powell said. Read More…
