The salary required to buy the average Australian home is rising despite falling property prices

Falling house prices since the May Budget were supposed to save Australian homebuyers – instead a huge pay rise has become the bare minimum needed to get the keys to an average home.

New modeling has found the Great Australian Dream has been hijacked by incessant interest rate hikes that have driven up the cost of owning property even as prices fall.

Everyday workers now face an insurmountable pay gap as bank fitness checks and criminal penalties in monthly repayments require paychecks well above the household average.

The origin of the crisis is Sydney, where hopeful buyers now need to have a gross income of $245,000 a year to overcome mortgage stress and secure a property at an average price, Canstar data showed.

> View the income you need to buy a house in NSW/Vic/Qld

This comes as buying an average priced house at current interest rates after four years increases the RBA cash rate this year, taking interest rates to their highest in 15 years.

Concern about paychecks continues to spread across capital cities across the country, with the average-priced house in Brisbane now only affordable to those earning $185,000 a year.

The same house in Brisbane would have been affordable for an annual earner of $160,000 last year.

That means the typical buyer would have needed a raise of nearly $25,000 to keep up with the changes in new home repayment costs.

Josh Sale, head of research at Canstar Group, said borrowing costs rose much faster as property values ​​were revised downwards.

“Declining borrowing power means they need a significantly higher salary to qualify for a loan for a cheaper home, while persistent inflation continues to erode their ability to save a deposit,” he said.

Matthew Pollock, CEO of Master Builders NSW, said: “We have a ridiculous scenario where house prices are falling by the most in 40 years, but housing affordability is not improving.”

“Think about it for a moment… it’s harder for people to buy a home, despite tax changes aimed at driving up house prices. This is all the evidence we need that the federal government’s capital gains tax increase and negative interest rate changes have failed.”

Canstar data showed the income now required to afford a purchase was extremely high in every capital city:

QUEENSLAND

Pay rise you need to buy houses in Qld suburbs has been revealed

The data showed couples in Brisbane needed a pay rise of over $30,000 this year to keep up with the property market.

It found that the income needed to buy a home is rising about eight times faster than wage growth.

The average salary of a full-time employee increased by about $3,600 in fiscal year 2025-26.

Meanwhile, the income threshold for banks to approve a standard home loan rose by an average of $30,258 over the same period.

That means homebuyers would need to work an additional 11 hours each week at the average hourly rate to cover the 12-month increase in required borrowing power following this month’s rate hike.

MELBOURNE

“Out of reach”: Buyers locked out of 62 Melb suburbs

The decline in Melbourne’s housing market is not helping buyers as rising interest rates prompt couples to search more for the city’s typical home in 62 suburbs this year compared to last.

Two-person households with incomes that allow them to afford a typical priced home of $960,000 with a 30-year mortgage can now only afford to buy in 146 suburbs.

The same couple would have been able to afford the typical home in 210 neighborhoods in October 2025.

According to analysis by financial comparison website Canstar.com.au, Melton with a median value of $570,000, Melton South with $580,000 and Wyndham Vale with $610,000 are the cheapest locations for buyers looking for a home in Melbourne.

SYDNEY

Salary needed to crack Sydney’s most popular suburbs has been revealed

A typical Sydney home now requires a pre-tax income of almost $250,000 a year, an increase of almost $11,000 from this time last year.

Someone hoping to buy an average-priced unit with a 20 percent down payment — no small feat at current prices — would need an income of about $140,000 a year, an increase of about $9,000 from the previous year.

Loan market broker Julian Choo said couples with a combined income of around $200,000 were largely the norm for first-time home buyers, while incomes of $400,000 or more were “extremely rare.”

“Most people who buy more expensive homes are using equity from an existing property to make the purchase or they have an inheritance from mom and dad’s bank,” Mr Choo said.

Canstar’s modeling assumed buyers used a 30-year loan with a 20 per cent down payment, paying principal and interest on a mid-priced home at the current average loan interest rate of 6.49 per cent.

The credit strength calculation assumed annual expenses of $24,000 for an individual and $48,000 for a couple, no debt and no dependents, and an interest rate buffer of 3 percent.

These calculations were made based on the property prices recorded last year and the prevailing loan interest rates at the time.

SOUTH AUSTRALIA

To buy a typical house in South Australia with a 20 per cent deposit, a single person would need to earn, on average, a whopping $27,646 more than they did last year before tax.

Single buyers needed to earn $167,424 before tax to afford an average priced home in Adelaide. Last year it was $139,778

Those looking to purchase a unit do slightly better, as an average priced unit requires an average pre-tax income of $114,741. That’s $17,656 more than this time last year.