Source : the age
Even Perth’s high-income earners are being priced out of homeownership, with new data revealing that since 2019, soaring property prices have made it virtually impossible for many couples to save enough for a house deposit — despite earning well above the average wage.
Back in 2015, then-treasurer Joe Hockey famously claimed all it took to buy a home was “a good job that pays good money”. But that advice feels almost absurd a decade later, with median Perth house prices rising from $486,000 in 2019 to $764,250 in 2024.
Not one worker buying alone in the 17 occupations – from childcare workers to surgeons – analysed by left-leaning think tank The Australia Institute would have saved enough over the past five years to reach a 20 per cent deposit for the median-priced Perth house.
Home-buying hopefuls having less than a 20 per cent deposit usually require expensive lenders’ mortgage insurance.
In Perth, a registered nurse in June 2019 was aiming for a $97,200 deposit (representing 20 per cent of the median house prices of $486,000) saved over nearly 12 years.
By December 2024, they would have saved $52,346. But now the median house price is $764,260, so they would need a $152,850 deposit – leaving them $100,504 short.
The numbers are better for couples. However, out of 17 couple combinations analysed, only three (surgeon/nurse, school principal/solicitor, and GP/solicitor) would have saved enough by December 2024 for a 20 per cent deposit for the average Perth home after five years.
A bank worker/checkout operator would be the furthest away, still needing $80,461, followed by a mechanic/child carer couple, who would need $69,147.
Chief economist Greg Jericho said the reality was that for many people with “a good job that pays good money”, the possibility of owning a home was unreachable without help either from a partner who also has a good job or the bank of mum and dad.
“People who were coming to work in the ’70s and ’80s could manage to do it on one income,” he said.
“It was always hard to save for a home, but it was at least plausible.”
Jericho said Perth’s housing market had quickly turned from one of the most affordable in the nation to one where saving for a deposit has become an impossibility for single people.
“After a decade of largely stagnant house prices after the end of the mining boom, since the middle of 2019 prices have risen as fast as they have in any capital city,” he said.
“Even assuming that people were able to save 15 per cent of their after-tax income and earn an average interest rate on those savings for many people the goal has gotten further away.
“These figures highlight the urgent need for changes to housing policy.”
The Australia Institute analysis, based on ABS, ATO and RBA data, assumes a worker earning the median salary for their profession saved 15 per cent of their after-tax salary each year towards a goal of a 20 per cent deposit.
The modelling assumes that a buyer is purchasing a home out of savings from their salary.
But, in practice many actual buyers are choosing more modest properties, taking advantage of government low-deposit schemes, and they may also switch jobs or get gifts or guarantees from family members.
About 30 per cent of new mortgages go to borrowers with deposits of 20 per cent or less.
Strategic Property Group managing director Trent Fleskens said clearly it was a lot harder to purchase a home, however people were still buying every day with many using other means such as lower deposits and parental guarantees.
“It’s no surprise that, as prices rise, homeownership is becoming less likely for each generation, even the high-income earners,” he said.
“However, I’d hold a candle for those in Sydney who make less than us on average and have house prices twice as expensive as us.”
