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.
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