Here’s how much income you need to buy your dream home
If you’re wondering how much money you need to earn to purchase property, new modelling has found the answer.
The following calculations are based on the median house price and assuming the buyer has a 20% deposit.
Buyers in Sydney would need a gross annual income of $192,400 per year to purchase a two-bedroom house, based on Domain property price data and Canstar analysis of mortgage serviceability rules. They’d need to earn $217,800 per year for a three-bedroom house and $281,100 per year for a four-bedroom house.
Melbourne buyers would need to earn $146,100 for a two-bedroom house, $153,100 for a three-bedroom house and $173,800 for a four-bedroom house.
Adelaide ranks third in terms of income requirements – buyers would need to earn $120,000 per year to purchase a two-bedroom house, $135,700 for a three-bedroom house and $167,000 per year for a four-bedroom house.
In Brisbane, buyers would need $113,000 to purchase a house with two bedrooms, $137,400 with three bedrooms and $153,900 with four bedrooms.
Domain and Canstar modelled one other capital city, Perth, where buyers would need an annual household income of $99,300 for a two-bedroom house, $111,800 for a three-bedroom house and $137,400 for a four-bedroom house.
Three tactics to beat out other buyers
Part of the reason it can be challenging to afford your dream home is that prices are rising in the vast majority of housing markets throughout Australia. Over the year to March, prices rose in 88.4% of markets throughout Australia, according to CoreLogic.
That means buyer competition is strong.
With that in mind, here are three things you can do to improve your chances of beating out other buyers:
- Make a fair offer – begin with a realistic bid, rather than a lowball offer, because real estate agents often favour buyers they regard as serious.
- Be flexible with settlement – you might be able to win over the vendor if you can offer them a special deal on settlement, such as an extended settlement or a buy-and-leaseback offer.
- Get ahead of the auction – if you make a strong offer ahead of the auction (assuming that’s how the property is being sold), the vendor might decide a bird in the hand is worth two in the bush and accept your deal.
One final point – it can make a difference to get a home loan pre-approval before you start your property search, because agents prefer buyers who are able to transact quickly.
I can help you with the pre-approval. I’ll compare loans from a diverse range of lenders, shortlist the standout offers and then manage your application.