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Australians need more of their income than ever before to pay for rent, mortgage repayments

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Australians need more income than ever to pay rent and mortgages

Australians are being forced to part with more of their income than ever before to pay for housing. (Dion Georgopoulos) Australian cities ranked as the second most cost-effective in the world View gallery Both figures exceed typical measures of housing stress, which usually apply to people who spend more than 30 per cent of their income on rent or a mortgage. The report also found it takes 10.6 years to save a 20 per cent deposit on an average home, with property increasingly out of reach for people on lower and middle incomes. “Access to home ownership is likely to continue to be concentrated among higher-income, higher-wealth households, a pattern that has been evident in the past,” the report states. Explained: What the Reserve Bank of Australia is really thinking about when setting interest ratesANZ and CoreLogic found that even some high-income households were struggling to buy a home, with households earning $172,000 a year only able to afford half of the homes on the market. “Even for high-income households, access to the property market has been significantly reduced, putting pressure on the cheaper end of the market,” the report states. “Modelling for September 2024 shows that only 10% of the property market is truly affordable for middle-income households (requiring less than 30% of income to repay a loan). “This is significantly lower than the 40% of Australian homes that will be affordable to middle-income households in March 2022.”

Australians need more income than ever to pay rent and mortgages

No housing market is affordable for people on low incomes. (Joe Armao/The Age) 0 per cent of the housing market is affordable for low-income households. The report found that while mortgage costs are likely to fall next year due to expected interest rate cuts (ANZ Bank expects the first cut in February, taking the official cash rate to 3.6 per cent by the end of 2025), there is no guarantee that housing affordability will follow. “Historical analysis of cash rate movements and housing values ​​suggests that a decline in housing loan serviceability could be partially offset by increased demand for credit and the likelihood of renewed upward pressure on housing values,” the report said.

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