What a couple needs to earn to be considered rich in Australia and afford a house as rates rise

An Australian couple needs to earn more than $121,000 between them to be considered above average and afford an ordinary house in an outer suburb of a major city.

The country’s average weekly household income stood at $2,329 in the 2019-20 financial year, new Australian Bureau of Statistics figures released on Thursday showed. 

The new data showing typical incomes before tax rose by just $30 in a year – little comfort with interest rates tipped to rise as early as next week and inflation soaring to two-decade highs.

Before tax, Australian couples earned $121,108 on average, with one parent often working part-time to look after the children.

A couple buying a house on two incomes could afford to borrow up to $726,648 before they crossed the mortgage stress threshold of ‘six’ – the level the Australian Prudential Regulation Authority deems to be risky.

With a 20 per cent deposit, they could afford a house worth $908,000.

That means an average dual-income couple could just afford a middle-market house at Penrith in Sydney’s west where $908,861 is the median house price, going by CoreLogic data.

But they also have to be prepared for a 57km commute to the city.

Houses slightly closer to the city now have median house prices in the seven figures, including Seven Hills, 37km from the city. 

Should this typical couple move to Melbourne, they would be able to afford a house at Springvale where $902,851 is the mid-point house price in a suburb 30km from the city.

In Brisbane, this couple would be able to buy a house at  Tingalpa, 13km from the city, where $895,324 is the mid-point house price.

An average dual-income couple could just afford a middle-market house at Penrith in Sydney’s west where $908,861 is the median house price, going by CoreLogic data

The Reserve Bank of Australia is now expected to raise interest rates in May after official data showed headline inflation in the year to March surging by 5.1 per cent – the fastest pace since June 2001 after the GST was introduced.

This would mark the first cash rate increase since November 2010. 

A couple owing $726,648 would now be paying $2,793 a monthly on their mortgage under a variable rate of 2.29 per cent. 

ANZ and Westpac are now expecting the RBA to raise the cash rate by 0.15 percentage points on Tuesday next week, that would take rates to 0.25 per cent from a record-low of 0.1 per cent.

The average couple with that mortgage would see their repayments rise by $56 to $2,849 as their variable rate climbed to 2.44 per cent, based on a bank passing on the RBA rate rise in full.

In Brisbane, this couple would be able to buy a house at Tingalpa, 13km from the city, where $895,324 is the mid-point house price (pictured is a house that recently sold for $900,500)