<\/p>\n
A decision to hike interest rates by Reserve Bank governor Michelle Bullock could squeeze homebuyers out of more than 100 Aussie suburbs and towns.<\/p>\n
Australia\u2019s average homebuyer is facing a 101 suburb wipeout on where they can afford a house if the Reserve Bank hikes interest rates on Tuesday. <\/p>\n
One rate cut is enough to wipe about $20,000 from the borrowing power of the nation\u2019s typical homebuying household, taking them from being able to afford homes with $877,000 down to homes maxing out around $858,000.<\/p>\n
Analysis of impacts to borrowing capacities also shows that a second rate hike before the end of the year could leave those borrowers who can afford the nation\u2019s average loan struggling to get a home worth $840,000 and at risk of no longer being able to access 236 areas around the nation that they can afford today.<\/p>\n
RELATED: Rates nightmare: Experts tip double RBA hike before Christmas<\/a><\/p>\n One RBA decision can affect home ownership for more than a decade, research finds<\/a><\/p>\n Top 6 banks panic: Aus\u2019 biggest lenders hike rates before RBA can<\/a><\/p>\n Industry experts are warning a downshift in borrowing power will also have impacts on the nation\u2019s wider financial health, with prospects the nation\u2019s average homebuyer being forced to purchase cheaper homes will impact state budget revenues through reduced stamp duty.<\/p>\n And while the impact for buyers will likely be looking for a more affordable home, with the nation\u2019s housing market already losing ground it could mean sellers in even relatively affordable suburbs that were currently attracting the nation\u2019s average buyer will be facing less competition for their home \u2014 and a worse hit to prices.<\/p>\n While the nation\u2019s typical homeloan was $731,000 in June, according to Australian Bureau of Statistics figures, the minimum household income most lenders would accept an application for that much debt is about $162,500 a year. <\/p>\n What Rate Hikes Will Do To Your Home Dream<\/p>\n Household income $75,000 $100,000 $150,000 $200,000 $250,000 $300,000 $107,300 (Aus median) $162,444 (Aus average loan wage) Source: MoneySmart.gov.au, ABS<\/p>\n It equates to being able to borrow about 4.5 times your income, typically only possible if you have minimal liabilities such as credit card debt, other loans and dependent family.<\/p>\n With a 20 per cent deposit, it means a family pulling in that wage could purchase a home worth up to $877,200.<\/p>\n That drops to $858,158 with on rate hike, and down to $839,915 with a second. <\/p>\n For a family on a more modest budget, with annual income at $100,000, a single extra rate hike would cut their access from homes worth up to $540,000 to those worth about $528,000 and sideline dozens of towns and suburbs around Australia.<\/p>\n Higher income earners are also facing compromises, with households earning $300,000 a year likely to see their access to 47 suburbs impacted as a single rate hike cuts their purchasing power from $1.62m to $1.585m. <\/p>\n REA Group economist Luc Redman said borrowing up to 4.5 times income was typically considered quite high and would come close to maximum capacity for most.<\/p>\n REA Group economist Luc Redman believes while home values will fall this year, they won\u2019t outpace lost borrowing power from rising interest rates.<\/p>\n For those heading to that level, any Reserve Bank hike before the end of the year could be more problematic than for most others \u2014 and was unlikely to be compensated for by falling home prices.<\/p>\n \u201cThe instantaneous effect of interest rates is increased repayments for loan holders and reduced borrowing capacity for households,\u201d Mr Redman said.<\/p>\n \u201cAs that cools demand in the economy, the subsequent short-term effect is on slowing home prices as competition reduces.<\/p>\n \u201cBut it is likely that the reduction in borrowing capacity from interest rates will be larger than the downward pressure on home prices, because of ongoing supply shortages.\u201d<\/p>\n Real Estate Institute of Australia president Jacob Caine said their analysis of housing affordability had recently found 59 per cent of the median family\u2019s income was being spent paying their mortgage, working out to in excess of $6000 a month \u2014 up 12.5 per cent from a year prior.<\/p>\n Real Estate Institute of Australia president Jacob Caine says they had already been tracking significant impacts to housing affordability from rate hikes earlier in the year.<\/p>\n \u201cThe prospect of another interest rate rise will only further negatively impact those figures, and drive up the average monthly repayment,\u201d Mr Caine said.<\/p>\n \u201cNot only will prospective buyers be dedicating more of their income to service the mortgage, but they will have less choice of where and how to live as a result.\u201d<\/p>\n He added that impacts on borrowing power would hurt those struggling to get into or stay in the market, for those with more equity behind them there could be better opportunities to purchase \u2014 and homeowners wanting to sell more affordable properties could also benefit from increased demand as buyers were concentrated on lower price brackets.<\/p>\n However, Mr Caine warned all Australians were likely to feel the impacts of a spring with fewer home sales and potentially lower prices, noting that government budgets around the country would next year see the impacts of a real estate market struggling to meet the populations\u2019 needs.<\/p>\n Australians selling home in suburbs that are a key target for the average homebuyer today could be getting less attention after a rate hike.<\/p>\n \u201cWhat that means for state and territory governments is a massive reduction in tax revenue, predominantly through stamp duty,\u201d he said.<\/p>\n \u201cFor the average homeowner or renter, across all states, that means fewer services and lower quality outputs from their government, and functionally a reduction in the quality of their life as well.\u201d<\/p>\n Real Estate Buyers Agents Association of Australia president Zoran Solano said he was expecting home buyers would likely find themselves having to look lower down the ladder after a rate hike \u2014 but warned there was also a risk some might just look to rent instead.<\/p>\n \u201cWhile interest rates are going up, people will prioritise securing and holding a home over a lot of other things,\u201d Mr Solano said.<\/p>\n \u201cBut they might need to buy in a more affordable suburb, and that might lead to a stimulation of that more affordable property.<\/p>\n \u201cWe might see a compression of buyers to the bottom end of the market.\u201d<\/p>\n Real Estate Buyers Agents Association of Australia president Zoran Solano is expecting buyer activity could pull back following a rate hike \u2014 leading to fewer sales.<\/p>\n For investors, he said one and certainly two rate hikes would potentially even see them hold off from a purchase \u2014 potentially until the next federal election in 2028, in the hopes a new government might bring more favourable conditions for investors after Anthony Albanese this year made sweeping changes to negative gearing and capital gains tax discounts.<\/p>\n Mr Solano added that he was already encountering homeowners deciding to sell and return to the rental market to do away with the stress of rate hikes on their mortgage repayments, though warned this could lead to a concerning increase in tenants without a rise in investors.<\/p>\n \u201cAnd there\u2019s a changing demographic in Australia where some of the younger Australians will just look at this and say I\u2019m content renting, I\u2019d rather go on holiday and I don\u2019t want to get connected to a mortgage,\u201d he said.<\/p>\n Where Average Buyer Will Struggle To Buy After Next Rate Hike<\/p>\n Aldinga Beach \u2013 SA<\/p>\n Angle Park \u2013 SA<\/p>\n Angle Vale \u2013 SA<\/p>\n Athol Park \u2013 SA<\/p>\n Banksia Park \u2013 SA<\/p>\n Beenleigh \u2013 QLD<\/p>\n Bees Creek \u2013 NT<\/p>\n Bellara \u2013 QLD<\/p>\n Bentley \u2013 WA<\/p>\n Berkeley \u2013 NSW<\/p>\n Berrambool \u2013 NSW<\/p>\n Bilingurr \u2013 WA<\/p>\n Bindoon \u2013 WA<\/p>\n Black River \u2013 QLD<\/p>\n Blackett \u2013 NSW<\/p>\n Bolton Point \u2013 NSW<\/p>\n Boronia Heights \u2013 QLD<\/p>\n Brabham \u2013 WA<\/p>\n Broadwood \u2013 WA<\/p>\n Budgewoi \u2013 NSW<\/p>\n Burrill Lake \u2013 NSW<\/p>\n Byford \u2013 WA<\/p>\n Coffs Harbour \u2013 NSW<\/p>\n Crestmead \u2013 QLD<\/p>\n Crestwood \u2013 NSW<\/p>\n Cudmirrah \u2013 NSW<\/p>\n Dapto \u2013 NSW<\/p>\n Deception Bay \u2013 QLD<\/p>\n East Geelong \u2013 VIC<\/p>\n Edgeworth \u2013 NSW<\/p>\n Endeavour Hills \u2013 VIC<\/p>\n Ethelton \u2013 SA<\/p>\n Evatt \u2013 ACT<\/p>\n Ferndale \u2013 WA<\/p>\n Fernvale \u2013 QLD<\/p>\n Ferryden Park \u2013 SA<\/p>\n Forrestfield \u2013 WA<\/p>\n Frankston \u2013 VIC<\/p>\n Furnissdale \u2013 WA<\/p>\n Geelong West \u2013 VIC<\/p>\n Gleneagle \u2013 QLD<\/p>\n Glenroy \u2013 VIC<\/p>\n Glenvale \u2013 QLD<\/p>\n Gobbagombalin \u2013 NSW<\/p>\n Gordon \u2013 ACT<\/p>\n Heathcote Junction \u2013 VIC<\/p>\n Higgins \u2013 ACT<\/p>\n Hill Top \u2013 NSW<\/p>\n Hindmarsh Island \u2013 SA<\/p>\n Holden Hill \u2013 SA<\/p>\n Jarrahdale \u2013 WA<\/p>\n Jesmond \u2013 NSW<\/p>\n Kamerunga \u2013 QLD<\/p>\n Kenilworth \u2013 QLD<\/p>\n Kianga \u2013 NSW<\/p>\n Kilkenny \u2013 SA<\/p>\n Kingsbury \u2013 VIC<\/p>\n Kooralbyn \u2013 QLD<\/p>\n Kyneton \u2013 VIC<\/p>\n Lake Conjola \u2013 NSW<\/p>\n Lake Haven \u2013 NSW<\/p>\n Latham \u2013 ACT<\/p>\n Llanarth \u2013 NSW<\/p>\n Lloyd \u2013 NSW<\/p>\n Menzies Creek \u2013 VIC<\/p>\n Milpara \u2013 WA<\/p>\n Modbury \u2013 SA<\/p>\n Mooroolbark \u2013 VIC<\/p>\n Muirhead \u2013 NT<\/p>\n Narre Warren South \u2013 VIC<\/p>\n Normanville \u2013 SA<\/p>\n North Rothbury \u2013 NSW<\/p>\n O\u2019Halloran Hill \u2013 SA<\/p>\n Osborne \u2013 SA<\/p>\n Pooraka \u2013 SA<\/p>\n Port Adelaide \u2013 SA<\/p>\n Port Fairy \u2013 VIC<\/p>\n Port Kennedy \u2013 WA<\/p>\n Purga \u2013 QLD<\/p>\n Queanbeyan \u2013 NSW<\/p>\n Queanbeyan West \u2013 NSW<\/p>\n Redbank \u2013 QLD<\/p>\n Redwood Park \u2013 SA<\/p>\n Ridgewood \u2013 WA<\/p>\n Rockingham \u2013 WA<\/p>\n Royal Park \u2013 SA<\/p>\n Safety Bay \u2013 WA<\/p>\n Selby \u2013 VIC<\/p>\n Skye \u2013 VIC<\/p>\n Springvale South \u2013 VIC<\/p>\n The Palms \u2013 QLD<\/p>\n Toogoom \u2013 QLD<\/p>\n Tootgarook \u2013 VIC<\/p>\n Tyabb \u2013 VIC<\/p>\n Tynong \u2013 VIC<\/p>\n Warnervale \u2013 NSW<\/p>\n Waterford West \u2013 QLD<\/p>\n West Beach \u2013 WA<\/p>\n Woolner \u2013 NT<\/p>\n Wulkuraka \u2013 QLD<\/p>\n Yalyalup \u2013 WA<\/p>\n Source: ABS, MoneySmart.gov, REA Group<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: \u2018Serious concern\u2019: Why approvals aren\u2019t translating into real homes<\/a><\/p>\n Rising seas to smash Aussie homes in $855bn economic disaster<\/a><\/p>\n
\nBorrowing capacity today
\nPurchase price today
\nPurchase price after 0.25ppt hike
\nPurchase price after 0.5ppt hike<\/p>\n
\n$337,500
\n$405,000
\n$396,170
\n$387,748<\/p>\n
\n$450,000
\n$540,000
\n$528,226
\n$516,997<\/p>\n
\n$675,000
\n$810,000
\n$792,499
\n$775,652<\/p>\n
\n$900,000
\n$1,080,000
\n$1,056,612
\n$1,034,150<\/p>\n
\n$1,125,000
\n$1,350,000
\n$1,320,725
\n$1,292,649<\/p>\n
\n$1,350,000
\n$1,620,000
\n$1,584,838
\n$1,551,148<\/p>\n
\n$482,850
\n$579,420
\n$566,896
\n$554,845<\/p>\n
\n$731,000
\n$877,200
\n$858,158
\n$839,915<\/p>\n<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n