New research shows next rate hike will lock thousands out of home ownership

Young home buyers were stung by the February rate hike. Picture: Jeremy Piper

When Michele Bullock ascends to the pulpit to hand down the RBA’s March rate decision, she will have the home ownership dreams of thousands of Australians in her hands.

A second rate hike for the year would push a mortgage out of the reach of vast numbers of borrowers around the country, with those earning an average income of $100,000 completely priced out of some capital cities, according to exclusive new research by Canstar.

A third rate hike, as predicted in May, would put the Australian dream further out of reach, said Canstar data insights director Sally Tindall.

NSW: The salary you now need to earn to buy in Sydney

“The great Australian dream of owning your own home has officially decoupled from the average Australian wage in many locations,” Ms Tindall said.

The situation was particularly bleak in NSW, with Sydneysiders set to require a household income of about $300,000 to buy a median priced house in Sydney with just a 5 per cent deposit, should the RBA hand down a hike in March.

Canstar data insights director Sally Tindall. Picture: Tim Hunter.

“We’re looking at a fundamental structural issue rather than a rounding error,” Ms Tindall said. “Add in a couple of kids and the equation gets even harder.”

VIC: The suburbs where average earners can still buy

Meanwhile, Victoria is a single interest rate hike away from having fewer than 150 suburbs where a person earning under $100,000 can afford the mortgage on a house, with just 10 of those areas in Melbourne.

In Queensland, average wage earners are already priced out of the Gold Coast house market, with between $200,000 and $300,000 in annual wages becoming a standard requirement for some suburbs. Brisbane is set to follow if a rate hike comes to pass.

QLD:The salary you need to afford a home in all Qld suburbs

In South Australia, an average-earning single with a 20 per cent deposit could afford to buy in just 25 locations across the state – none in metro Adelaide – without sending themselves into mortgage stress if rates were to rise this month.

It’s worse for those buying on a 5 per cent deposit, with just 13 locations available.

Up in the top end, a Northern Territory homebuyer can still buy in more than half of Darwin’s suburbs if they earn $100,000 a year.

There will be a lot riding on RBA governor Michele Bullock’s March rate announcement. Picture: Gaye Gerard

SA:All Adelaide suburbs where average earners can still buy

Ms Tindall said a standard 0.25 per cent hike to the cash rate translates to a $12,000 drop in the maximum amount the average income earner on a full-time wage can borrow from the bank.

“Not a deal breaker for most, in isolation, however, a series of hikes could put the goalposts out of reach for already stretched buyers,” she said.

NT:Darwin suburbs where $100k salary gets you a home

“To add insult to injury, despite the February hike and the threat of further rises, property prices are expected to keep on climbing due to a lack of stock, increasing the squeeze on first home buyers.”