Beach suburbs affordable for an average income Aussie with fewer young people able to buy a house

Australians earning an average income can still buy a house near the beach in a regional area as home ownership plunges among the young. 

Those in their twenties and thirties, able to work from home or relocate, have options in pockets of Melbourne‘s Port Phillip Bay, Victoria’s Gippsland region, the NSW mid-north coast and Hervey Bay in Queensland

The median house price at Pialba, for example, about 240km north of Brisbane, is $542,784, while it’s $653,616 in a beach town near Coffs Harbour.

Millennials, or those aged 25 to 39, have been priced out of houses in the big cities while once affordable coastal towns have become more exclusive, but prices are now falling.

Little more than half, or 54.6 per cent of these young adults, were homeowners during last year’s Census, Australian Bureau of Statistics data has revealed.

By comparison two-thirds or 65.8 per cent of Baby Boomers, born between 1946 and 1965, owned a home at the same age in 1991.

Australians earning an average income can still buy a house near the beach in a regional area as home ownership plunges among the young (pictured are young women at Surfers Paradise on the Gold Coast)

Life REALLY is harder for Millennials next to Baby Boomers

MILLENNIALS: Just 5.7 per cent of those aged 25 to 39 had paid off their home in 2021

Sydney’s median house price of $1,283,502 is so dear an average, full-time worker on $92,030 has a debt-to-income ratio of 11.2 even after a 20 per cent deposit

BABY BOOMERS: One in five of them in the 25 to 39 bracket had paid off their home in 1991 

Sydney’s median house price in 1990 was $194,000 when interest rates were at 17 per cent

But an average-income worker on $27,794 had a debt-to-income ratio of 5.6 with a 20 per cent deposit 

Three decades ago, 19.4 per cent of Baby Boomers had paid off their mortgage by their late thirties compared with just 5.7 per cent of Millennials now. 

When many baby boomers were in their late thirties, houses as a proportion of income were so much cheaper.

In early 1990, interest rates were at 17 per cent but Sydney’s median house price was just $194,000.

An average full-time worker earning $27,794, with a 20 per cent deposit, had a debt-to-income ratio of 5.6.

Houses were even cheaper, compared with income, everywhere else in Australia which meant the Reserve Bank had to put up rates more to tackle high inflation. 

While RBA interest rates are now at a nine-year high of 2.6 per cent, Sydney’s median house price of $1,283,502 is so dear a person on a $92,030 salary, with a $1million mortgage, has a very dangerous debt-to-income ratio of 11.2.

The Australian Prudential Regulation Authority, the banking regulator, considers it risky for a borrower to owe the bank six times what they earn, which means a borrower has to service a mortgage with their spouse.

Young Australians wanting to live and own a house near the beach now have to move to a regional area, with more choices as prices come off their 2021 peaks.

Australians in their twenties and thirties, able to work from home or relocate, have options in pockets of Melbourne's Port Phillip Bay, Victoria's Gippsland region, the NSW mid-north coast (Nambucca Heads, pictured) and Hervey Bay in Queensland

Australians in their twenties and thirties, able to work from home or relocate, have options in pockets of Melbourne’s Port Phillip Bay, Victoria’s Gippsland region, the NSW mid-north coast (Nambucca Heads, pictured) and Hervey Bay in Queensland

Three decades ago, 19.4 per cent of Baby Boomers had paid off their mortgage by their late thirties compared with just 5.7 per cent of Millennials now. Little more than half, or 54.6 per cent of these young adults, were homeowners during last year's Census, new Australian Bureau of Statistics data has revealed. By comparison two-thirds or 65.8 per cent of Baby Boomers, born between 1946 and 1965, owned a home at the same age in 1991

Three decades ago, 19.4 per cent of Baby Boomers had paid off their mortgage by their late thirties compared with just 5.7 per cent of Millennials now. Little more than half, or 54.6 per cent of these young adults, were homeowners during last year’s Census, new Australian Bureau of Statistics data has revealed. By comparison two-thirds or 65.8 per cent of Baby Boomers, born between 1946 and 1965, owned a home at the same age in 1991

An exodus from capital cities since the start of the pandemic saw double-digit annual surges in coastal home prices when interest rates were still at a record-low of 0.1 per cent.

But six consecutive monthly interest rate rises since May have caused prices to fall in both capital city and regional markets with the banks unable to lend as much because of government regulations.

Now 80 per cent of Australia’s house and unit markets are in decline, CoreLogic data showed.

Before the Reserve Bank of Australia raised interest rates in May, for the first time since 2010, an average, full-time worker earning $92,030 a year was able to borrow $684,100.

Australians wanting to be closer to a capital city have more choices near Melbourne. Frankston North, 66km south of the city centre, has a mid-point house price of $602,947 being only a short drive from Port Phillip Bay

Australians wanting to be closer to a capital city have more choices near Melbourne. Frankston North, 66km south of the city centre, has a mid-point house price of $602,947 being only a short drive from Port Phillip Bay

That means that with a 20 per cent deposit of $171,025, they had the capacity to buy a house worth $855,125 just six months ago, RateCity calculations show.

That same average-income worker would now only be able to borrow $531,200 which means that with a 20 per cent deposit of $132,800, they can buy a house worth up to $664,000.

For that kind of money, someone priced out of Port Macquarie or Coffs Harbour on the NSW mid-north coast can buy a house at Nambucca Heads, where the median house price is $653,616.

That’s well below the $1million mid-points for upmarket suburbs at nearby Bellingen and Bonville a short drive north.

Those after an even warmer Queensland climate are now priced out of the Gold Coast and the Sunshine Coast house markets.

But at Hervey Bay, 240km north of Brisbane, the median house price at Pialba is $542,784, with the money buying water views across the Fraser Island.

Those after a country feel a two-hour drive from Melbourne have choices at Wonthaggi (house pictured), where $642,048 is the median price

Those after a country feel a two-hour drive from Melbourne have choices at Wonthaggi (house pictured), where $642,048 is the median price

What an average-income earner can buy

FRANKSTON NORTH, Victoria: Median house price: $602,947

WONTHAGGI, Victoria: $642,048

NAMBUCCA HEADS, NSW: $653,616

NOWRA, NSW: $611,636

HERVEY BAY, Queensland:  $542,784 (Pialba)

Australians wanting to be closer to a capital city have more choices near Melbourne.

Frankston North, 66km south of the city centre, has a mid-point house price of  $602,947 being only a short drive or walk from Port Phillip Bay. 

Those after a country feel a two-hour drive from Melbourne have choices at Wonthaggi, where $642,048 is the median price.

Sydney has fewer choices a two-hour drive away but on the south coast. At Nowra, slightly inland, there is a median house price of $611,636.

An average-income earner is able to buy in Perth, where the median house price is $589,941 and Darwin, where $592,260 is the mid-point.

But they have to buy a cheaper house in Adelaide, where $704,692 is the mid-point, and Hobart, where the median price is $761,368.

The story is similar in Brisbane where the median house price is $841,923 and Melbourne, where $937,131 in the middle is still quite dear.

Those after an even warmer Queensland climate are now priced out of the Gold Coast and the Sunshine Coast house markets. But at Hervey Bay, 240km north of Brisbane, the median house price at Pialba (house pictured) is $542,784, with the money buying water views across to Fraser Island

Those after an even warmer Queensland climate are now priced out of the Gold Coast and the Sunshine Coast house markets. But at Hervey Bay, 240km north of Brisbane, the median house price at Pialba (house pictured) is $542,784, with the money buying water views across to Fraser Island

With more interest rate rises expected, RateCity research director Sally Tindall said prospective buyers needed to brace for the property downturn to continue in 2023

With more interest rate rises expected, RateCity research director Sally Tindall said prospective buyers needed to brace for the property downturn to continue in 2023

With more interest rate rises expected, RateCity research director Sally Tindall said prospective buyers needed to brace for the property downturn to continue in 2023.

‘If you are looking to buy, know that it’s highly likely property prices will fall further, before they pick up again, so understand what this means for you,’ she said.

The banks are required to assess a borrower’s ability to cope with a three percentage point increase in variable mortgage rates.’

The Reserve Bank cash rate is now at a nine-year high of 2.6 per cent, with rate increases in 2022 inflicting the most pain on borrowers since 1994.

Inflation in the year to September surged by 7.3 per cent – the fastest pace since 1990.

With inflation well above the Reserve Bank’s 2 to 3 per cent target, Westpac is expecting the RBA to raise interest rates by 0.5 percentage points on Tuesday, taking it to a new 10-year high of 3.1 per cent.

ANZ, NAB and the Commonwealth Bank are expecting a smaller 0.25 percentage point rate rise on November 1.

But a seventh consecutive rate rise on Melbourne Cup Day, whatever the size, will be the most in a row since the Reserve Bank began publishing a target cash rate in 1990 a generation ago. 

What the major banks are NOW expecting in for interest rates

WESTPAC: A 0.5 percentage point increase in November with cash rate peaking at 3.85 per cent in March

ANZ: A 0.25 percentage point increase in November (outside chance of a 0.5 percentage point rise) with cash rate peaking at 3.85 per cent in May

COMMONWEALTH: A 0.25 percentage point increase in November with cash rate peaking at 3.1 per cent in December

NAB: A 0.25 percentage point increase in November (outside chance of a 0.5 percentage point rise) with cash rate peaking at 3.1 per cent in December