Navigating the Australian Property Market: Income Benchmarks for Homeownership
Australia’s property market is complex, with significant variations in affordability across capital cities and even suburbs. The property market continued its dynamic journey in the final quarter of 2024, showcasing a blend of resilience and emerging challenges.
While growth persisted across many capital cities, a notable slowdown became evident, reflecting the interplay of rising interest rates, affordability pressures, and shifting consumer sentiment. This guide explores the income levels typically required to secure a home in each major city.
Sydney
Sydney’s housing market showed mixed results in the December quarter. House prices dipped slightly for the second consecutive quarter, falling $1,300 to $1.645 million, the only Australian capital to record a decline. This leaves house prices slightly below their June 2024 peak, with annual growth slowing to 3.2%. Conversely, unit prices in Sydney rose by $3,000 to a record $812,863, though annual growth also slowed to 2.6%, less dramatically than houses. This unit price growth outpaced house price growth for the second straight quarter, narrowing the price gap between the two property types.
Melbourne
Melbourne’s housing market rebounded strongly in the December quarter. House prices jumped nearly $16,000 (1.6%) to $1.039 million, the largest quarterly gain in three years and the first in a year, outperforming Sydney for the first time in four years. This surge lessened the annual decline to 1.0%, making Melbourne the sole capital with a 2024 house price drop. While a positive sign, Melbourne’s house prices remain below their 2021 peak, suggesting a nascent recovery. Unit prices also saw significant growth, rising almost $12,000 (2.1%) to $577,405, the strongest quarterly increase in 18 months. Despite this, annual unit price growth slowed, though units continued to outperform houses, narrowing the price gap to a two-year low.
Brisbane
Brisbane’s housing market continued its upward trend, with house prices surpassing $1 million for the first time, reaching $1,016,192. While quarterly growth saw some improvement, annual gains have slowed considerably. Unit prices also reached a record high of $632,644, maintaining Brisbane’s position as the second most expensive city for units, though growth in this sector has also cooled significantly.
Adelaide
Adelaide’s housing market continued its record-breaking run in the December quarter, with house prices climbing nearly $25,000 to $992,193, nearing the $1 million mark. However, growth slowed significantly compared to previous periods. Unit prices also edged up to a new record of $541,573, but growth in this sector has dramatically weakened as well. While both house and unit prices saw strong annual gains, growth is clearly losing momentum.
Canberra
Canberra’s housing market stalled in the December quarter, with both house and unit prices remaining unchanged. House prices held steady at $1.065 million, the first such instance in six years, and remain significantly below their 2022 peak, though annual gains saw a slight uptick. Unit prices also flatlined, improving slightly from the previous quarter’s decline but still marking the second consecutive quarter of annual decreases, a first in ten years, and sitting below their September 2023 peak.
Perth
Perth’s housing market continued its record-breaking streak, with house prices exceeding $900,000 for the first time, reaching $913,011. While growth persisted, the pace slowed significantly compared to previous periods, though Perth remains the strongest-performing house market in 2024. Unit prices also hit a new high of $511,119, surpassing $500,000, and while quarterly growth slightly accelerated, the overall trend shows a slowdown, with annual gains still robust but easing, making Perth the top-performing unit market as well.
Hobart
Hobart’s housing market showed diverging trends in the December quarter. House prices saw a significant rebound, accelerating for the first time in 15 months with a 4.6% increase, the strongest quarterly gain in three years, pushing annual growth back into positive territory. However, unit prices bucked the trend, declining by 1.5%, making Hobart the only capital city with a quarterly drop, further widening the price gap between houses and units.
Darwin
Darwin’s housing market showed continued signs of recovery in the December quarter. House prices rose for the third consecutive quarter, reaching a three-year high of $651,771, while unit prices also accelerated into positive territory for the first time in 15 months. While unit prices remain below their peak, the positive quarterly growth is a welcome sign, and both sectors saw improved annual growth.
Alternative Paths to Homeownership Beyond the Deposit:
While a substantial deposit and high income remain significant factors, several strategies can help aspiring homeowners navigate the current landscape:
- First Homeowner Grants and Incentives
- Family Support
- Rentvesting
- Lender’s Mortgage Insurance
Government initiatives, such as First Homeowner Grants and other incentives, can provide valuable financial assistance, making homeownership more attainable for eligible buyers.
The support of family remains invaluable. Cash gifts or loan guarantees can significantly boost a buyer’s deposit, reducing reliance on borrowing and improving loan approval prospects.
By purchasing an investment property in an affordable area and renting it out, buyers can generate rental income while continuing to live in their preferred location.
With rising interest rates and tighter lending criteria, LMI can be a crucial tool for buyers with smaller deposits. It allows borrowers to secure a mortgage with a lower down payment, making homeownership more accessible for a wider range of individuals.
It’s crucial to carefully consider individual circumstances and explore all available options before embarking on the homeownership journey. Seeking professional financial advice can provide valuable guidance and help navigate the complexities of the current market.
This updated section emphasizes the continued relevance of traditional strategies while acknowledging the evolving market realities. It highlights the importance of exploring options like LMI and rentvesting as potential solutions for navigating the challenges of the current market.
Ready to Explore Your Options?
Contact Manage Your Loans for personalised advice on securing your dream home. We offer a range of services to help you navigate the complexities of the Australian property market.