For someone earning the median capital city income and looking to tree-change into the median regional home, the ratio is only six times, making the move an attractive option for higher-income workers.
The house price boom has outstripped wages growth, so it takes longer to save a deposit on average.
For someone who could save 15 per cent of their income, it would now take a record 11.4 years to save a 20 per cent deposit for the median home. That’s an increase of 2.2 years since March 2020, the fastest gain in this metric ever.
Once a buyer manages to save a deposit, they will need to set aside a higher share of income to pay off their mortgage, with the portion of household income needed to service new mortgage repayments rising to 41.4 per cent, well below record levels but above the decade average of 36.5 per cent, and the third consecutive increase.
Potential buyers trying to save a deposit are also facing higher rents, with the share of income needed to service rent on a new lease lifting to 30.6 per cent, higher than two years earlier.
Rental affordability has worsened more in regional areas, where tenants need to spend 34 per cent of income on rents, compared to 28 per cent in capital cities.
Smaller capital cities also face more pressure on their rental markets, while in Sydney and Melbourne, the share of income needed to pay rent is still lower than in March 2020.
“What we’ve ended up with is a really challenging environment for the long-standing residents of these regional areas,” Emmett said.
She said many first-home buyers are getting help with their deposit from parents or grandparents, although hard data remains scant.
“It’s increasingly becoming the case that whether you’re able to buy a home and become a first-home owner increasingly depends on what sort of job your mum and dad had, and I suppose the question is – is that really, as a society, what we want?” she said.
She doubted housing affordability would improve much this year when rates rise, as mortgage repayments will be higher and property prices are not likely to fall enough to move the needle.
Damien Walker, mortgage broker at Atelier Wealth, said some first-home buyers are bridging the deposit gap by turning to lenders that offer loans with a low 15 per cent or 10 per cent deposit and no lenders’ mortgage insurance.
Others are getting help from parents in the form of cash gifts or guarantor loans, and some are using the federal government’s First Home Guarantee scheme.
He said it is important for first-time buyers using a small deposit to make sure they can make their repayments as the property market softens.
“If there is a small drop in the market, you will be at a higher loan to valuation ratio because you are already paying a small deposit,” he said.
Emma Greenhalgh, chief executive of housing peak body National Shelter, warned of the dire situation for renters.
“It is incredibly difficult for very low- and even moderate-income households,” she said.
“Every time there’s a housing crisis, people will say, ‘I’ve never seen it like this before’, but I think this truly is a case where services and organisations haven’t seen it like this, and I think the big difference is what’s occurring in the regions.
“People may have been making decisions to move to somewhere more affordable [in the past]. Those options aren’t available.”
She called for an increase in the Commonwealth Rent Assistance payment, as almost half of its recipients remain in housing stress, and for a national framework of tenancy legislations to offer consistency on dwelling standards, rent increases and no-grounds evictions.
Regional Australia Institute chief executive Liz Ritchie said regional residents had put off moving to cities over the past couple of years, adding to pressure on the rental supply as city dwellers arrived.
She called for greater commitments to social and affordable housing in regional areas for key workers, as well as more investment in diverse types of housing, such as apartments and townhouses.
“If we don’t have a barista, what sort of community do we have, [or] if we don’t have our key health workers?” she said.
“If you look at the monetary policy changes, people are hopeful that’s going to slow down some of that [price growth], but that remains to be seen.”
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