Recent comments about housing affordability and first-home buyers from Treasurer Joe Hockey have led to him being labelled out of touch.
People have been having a look at how much one would have to earn to live in certain suburbs in Melbourne and Sydney to illustrate the point that simply ‘getting a good job’ might not be enough for a first-home owner to enter the property market within a gazillion kilometres of the city centre.
A recognised definition of mortgage stress is if someone is spending more than 30 per cent of their salary on home loan repayments.
A comparison of the typical mortgage and a typical wage earner in a range of suburbs shows a full-time worker would be priced out of most suburbs in Melbourne.
Domain Group have published the following table to illustrate the average median house price and associated average income of some of Melbourne’s interesting suburbs;
Median house price and average income
Let’s look at Richmond here. It’s a trendy suburb right next to Melbourne’s CBD. The median house price is just over $1 million and to service that mortgage, a worker would need to pay $52,000 a year off it.
To afford that, the worker would need to be on $150,000 a year, which is actually the average salary of a Toorak resident, which according to the Australian Bureau of Statistics.
With the average full-time salary across the country at $74,724, it’s easy to see how Mr Hockey’s comments have landed him in hot water this week.