Despite being in Australia’s top income bracket, Maureen Pound and others like her find homeownership out of reach. New research unveils the grim reality of the salary needed to afford an average house.
Even with a growing number of affluent Australians, homeownership remains elusive for many, according to recent findings. Maureen Pound, residing in inner-city Melbourne and earning a top income, exemplifies this trend, unable to purchase the Victorian-era house she’s lived in for 14 years. The report from the Australian Housing and Urban Research Institute highlights a significant shift, with nearly a quarter of renters now in the top income brackets, up from eight percent in 1996. This indicates long-term structural changes in rental markets, with tenants earning salaries exceeding $140,000 per year.
Max Phelps, a mortgage advisor, underscores the challenge, explaining that even with a $100,000 salary, one’s borrowing capacity falls short of the average home price, especially in major cities like Sydney. The disparity between purchasing and renting becomes glaring, particularly in affluent neighborhoods. Rent-vesting, a rising trend where individuals invest in property but continue to rent their homes, offers a solution for some, allowing flexibility and exploration before committing to a purchase.
The allure of renting is not limited to Australia, as observed globally, with an 82 percent increase in high-income tenants in the United States between 2015 and 2020. However, this trend exacerbates the shortage of affordable homes, particularly impacting low-income households. The AHURI research reveals a dire situation, with 82 percent of renting households on very low incomes experiencing extreme affordability stress.
The housing affordability crisis extends beyond income differentials, affecting wealth distribution and exacerbating inequality. A report from The Grattan Institute underscores the widening gap between high and low-income Australians due to rising housing costs. Addressing this issue requires comprehensive solutions to ensure equitable access to housing for all Australians.
