Someone earning as little as $32,000 a year can buy a house in an Australian capital city.
That kind of money is well below the $38,500 full-time, minimum wage.
Know How Property Finance founder Bushy Martin said the banks generally approved loans provided repayments didn’t exceed 27 per cent of a single borrower’s pre-tax income.
Or put another way, a house was attainable if it was no more than 5.6 times a prospective buyer’s salary.
A young person earning less than the full-time minimum wage can still buy a house in a capital city (pictured is a stock image of a young couple)
That kind of money is well below the $38,500 full-time minimum wage. Still, it’s almost possible to buy a house in the northern Adelaide suburb of Elizabeth North, where the median house price is $178,067
By that logic, it’s possible to buy a house in the northern Adelaide suburb of Elizabeth North, near the old Holden factory.
The industrial suburb has a median house price of $178,067 – or an amount that’s 2.5 times cheaper than the city’s typical value, CoreLogic data shows
This means someone earning $31,600 a year can borrow $142,400 with a 20 per cent deposit, leaving them with annual repayments of $8,544.
Adelaide’s northern suburbs have been one of Australia’s best performing areas during the past year, with property values climbing by 0.8 per cent.
This occurred as Sydney’s median house price dived by 9.8 per cent and Melbourne’s equivalent values plunged by 10.7 per cent.
Daniel Walsh, the founder of the Your Property Your Wealth buyers’ agent, said a young, part-time worker living with their parents would be better placed to buy a house in a cheap Adelaide suburb as an investor.
‘Around $30,000 of income would possibly go close to being able to cut the mustard,’ he told Daily Mail Australia on Thursday.
‘It would be a stretch. If they lived at home with mum and dad, it might work.’
In Sydney’s west, the Mount Druitt area has houses for sale that are less than half the city’s median price
To buy a $410,000 house at Tregear, almost 50km from the city, requires a borrower to be earning $73,000
A house in Adelaide’s north would have weaker capital growth – more in line with inflation or the consumer price index – but higher rental yields.
‘They’re going to be a little bit slower in terms of growth – you’re probably averaging more CPI growth rather than higher average annual growth rate,’ Mr Walsh said.
‘If you look at it as a total return, let’s say you get eight per cent yield and you get two per cent growth, you get 10 per cent total return.’
Mr Walsh, who owns a house at Davoren Park as one of his nine properties, said the high rental yields meant he was able to pay off principal and interest through leasing it out.
Buying in other capital cities is more of a stretch, even in the cheapest suburbs.
In Sydney’s west, the Mount Druitt area has houses for sale that are less than half the city’s median price.
To buy a house with a backyard, however, someone needs to be earning significantly more than Australia’s median salary of $55,400.
Entering the house market in Brisbane is marginally easier, with a potential borrowing needing to earn $70,000 to buy a $394,000 home at Acacia Ridge
Mr Walsh said Brisbane had more capital growth potential because of employment and an increasing population
To buy a $410,000 house at Tregear, almost 50km from the city, requires a borrower to be earning $73,000.
Entering the house market in Brisbane is marginally easier, with a potential borrowing needing to earn $70,000 to buy a $394,000 home at Acacia Ridge, just 15km south of the city.
‘I would say that we’re probably going to have more growth just because of where Brisbane’s at,’ Mr Walsh said.
‘It’s got a lot more in terms of jobs, population growth so it’s more of a capital city than say Adelaide – it’s struggling at the moment with population growth.’
While Melbourne’s median price is dearer than Brisbane, it has some marginally cheaper suburbs.
A would-be home owner needs to earn $66,000 to buy a house at Melton, in Melbourne’s western suburbs.
In July, Australia’s biggest cities enjoyed price increases with Sydney’s median house price rising by 0.2 per cent to $864,993 as Melbourne’s equivalent values increased by 0.1 per cent to $710,151.
Since peaking in 2017, however, Sydney’s median house price has plummeted by a record 17.5 per cent while Melbourne’s has slid by 14.7 per cent.
A would-be home owner needs to earn $66,000 to buy a house at Melton, in Melbourne’s western suburbs
While Melbourne’s median price is dearer than Brisbane, it has some marginally cheaper suburbs