Cost of living: Houses now take 40+ years on average to pay off in parts of Australia — HtAG Analytics

Rapidly increasing home prices and rising interest rates mean homebuyers may now need to spend up to 144 years to pay off their mortgages, shock new research reveals.

Property technology firm HtAG Analytics showed how housing affordability continued to plummet by analysing their “years to own” metric, which estimated the number of years it would take a homebuyer to repay their home loan based on home prices, interest rates and median family income levels.

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Houses are the least affordable in New South Wales, taking an average of 42 years to own, followed by Victoria with an average of 39 years, and Tasmania at 38 years.

HtAG Analytics co-founder Alex Fedoseev said the major factors that impacted the years-to-own metric were high home prices, median wage per suburb, rising interest rates and the socioeconomics of the area.

“There can be a situation where prices may not be that high but wages in that locality are below the city average…the affordability metric will actually be higher,” Mr Fedoseev said.

“The higher the interest rates, the higher the repayments…the less likely the families in the neighbourhood based on their current wages can afford the repayments.”

Mr Fedoseev said two features that contributed to the consistent unaffordability of suburbs with years to own above 100 were areas with high house prices as well as a large cohort of renters.

“In these markets, a significant portion of the population is engaged in renting units rather than owning a house,” Mr Fedoseev said.

“While the majority of household incomes in these suburbs may suffice for renting or owning

a unit, they may not be adequate for purchasing houses.

“This leads to a property market that primarily supports rental properties in units and

maintains high house prices.”

Based on this metric, Strathfield in New South Wales was the most unaffordable place to own a house in Australia, with home buyers expected to spend 144 years to pay off an average mortgage.

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Soldiers Point in NSW, Noosa Heads in Queensland and Byron Bay in NSW were the most unaffordable suburbs for units, taking 82, 75 and 74 years to own, respectively.

However, Mr Fedoseev said the gap between owning a house and a unit was relatively smaller in South Australia and Queensland, indicating they were more balanced property markets.

“In contrast, New South Wales and Victoria exhibit a larger disparity, demonstrating the dominance of higher-priced houses in those markets,” Mr Fedoseev said.

One of the most affordable places in Australia to own property was Mount Isa in Queensland, taking just 3.5 years to pay off.

This was followed by Morowa in Western Australia, Kambalda East in Western Australia and Dysart in Queensland, taking 4.4, 5.19 and 5.97 years to fully own a unit.

Real Estate Institute of Australia’s president Hayden Groves said rapid rate rises had further deteriorated housing affordability as well as the average loan size not changing by much.

“This all goes back to, I think fundamentally, a lack of supply problem as to why we’re still seeing house prices increase,” Mr Groves said.

“There’s fewer property transactions and there’s fewer listings in the market…people who already own real estate who are looking to move around the market find it’s very difficult to find the next property that meets their needs.

“So they’re staying put and so you’ve got less mobility around the market as well as less on offer.”

Mr Groves said he was uncertain about when housing affordability conditions would improve as more demand came into the market and supply lagged behind, especially with constraints in the construction sector keeping projects on hold.

“Developers are not able to commence those developments because of the cost of construction, the cost of labour,” Mr Groves said.

“As a result, there’s all this pent up supply in the market that’s ready to go but until there’s a bit more certainty in the economic market…we’re not going to see meaningful supply come into the market.”

Mr Groves said the REIA was calling on the Greens and the Opposition in the federal parliament to pass the Housing Australia Future Fund.

“We do need more supply in the market and we need it now…the less we talk about it and the more we do, the better it’ll be for housing affordability going forward,” Mr Groves said.

“I think affordability will continue to deteriorate before it gets better and that could be as late as 2025, 2026.”.

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