The property market is hot, meaning housing affordability is getting tougher. So how much does the average Australian household need to put towards their monthly home loan repayments in the current market? Let’s take a look.

The recent property market boom has led to properties across the country going for well above their reserve price. Moody’s investor service says that housing affordability has decreased significantly, much different from the improving trend of 2020.

The deterioration was seen in all capital cities of Australia over the five months to February 2021, with Sydney being the worst.

Decreases in housing affordability leads us to beg the question, what percentage of your pay cheque goes towards a typical home loan? And how much can you afford for that percentage to be?

As of February 2021, on average, two income households will need to have about 24.6% of their monthly income going towards home loan repayments. Such a percentage is an increase from the 22.7% required in June and July of 2020 when new mortgages were at their most affordable in a decade.

But it’s not all bad news. Housing affordability, although declined, is still better than the ten-year average of 26.1%. Additionally, with the help of a mortgage broker to negotiate the best rates for you, the impacts of a declining housing affordability can be softened.

We can help you figure out your financing options and borrowing capacity so that you can feel comfortable in your purchasing power.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Emmanuel Guignard (MBA)
Director & Principal Mortgage Broker
With over 15 years’ experience in the finance industry and a recently completed MBA in Financial Planning, Emmanuel leads the broking team at Loanscope. His experience includes working with a wide range of property investors, from first time buyers to investors with large property portfolios. This includes handling complex applications involving trusts, company structures and self-managed super funds. He also operates as a qualified mentor to other mortgage brokers via the FBBA mentor program.
Emmanuel Guignard