Australia's housing market is facing a growing crisis, as rising rents, a lack of supply, and high demand have made it increasingly difficult for both renters and potential homebuyers to secure affordable accommodation.
Since 2020, rental prices have surged by 35%, while the country faces a projected shortfall of 257,000 new homes in the next five years, exacerbating the pressure on housing availability.
While Australians continue to grapple with the ongoing rental crisis, a new analysis by Mortgage Broker AU has explored the most and least affordable capital cities with a particular focus on the best prospects for saving towards a house deposit.
The study examined factors such as rent prices, average income, living costs, and savings potential, revealing Perth as the most favorable city for prospective homebuyers, while Brisbane emerged as the most challenging.
Key findings:
Perth has the highest average weekly salary at $2,108 and the lowest rent-to-income ratio of 30.85%, making it the easiest capital city to save for a house deposit
High living and transport costs in Brisbane make it the toughest capital city for saving a house deposit (least affordable)
Darwin’s rent-to-income ratio is the highest at 36%, meaning residents spend the largest portion of their income on rent
Hobart residents have the lowest monthly savings, based on 0.9% of their disposable income, at $65.
Perth Leads for Affordability
Perth ranked first in the study, with an affordability score of 8.56 out of 10. The city boasts the highest average weekly salary at AUD 2,108 and the lowest rent-to-income ratio of 30.85%. Renters in Perth spend significantly less of their income on housing, allowing them to save an estimated AUD 82 per month. With 40.5% of residents already holding mortgages, Perth is the city where saving for a deposit is quickest, despite moderate rent prices of AUD 650 per week.
"Perth’s combination of higher wages and lower living costs, particularly in housing and transportation, makes it a standout option for first-time homebuyers," said Shaun McGowan, CEO of Mortgage Broker AU.
Melbourne and Hobart Also Show Promise
Melbourne, Australia’s second-largest city, secured the second spot with an affordability score of 7.75. The average rent in Melbourne stands at AUD 580 per week, with a weekly salary of AUD 1,858. The city’s rent-to-income ratio of 31.2% is slightly higher than Perth’s, limiting monthly savings to around AUD 73. Despite the cost challenges, Melbourne’s vibrant culture and lifestyle continue to attract homebuyers.
Hobart ranked third with an affordability score of 7.38. While Hobart offers the lowest average rent at AUD 540 per week, its average salary is also lower at AUD 1,670. Residents are left with just AUD 65 in monthly savings—the lowest across the capital cities—due to a rent-to-income ratio of 32.35%.
Brisbane Faces Biggest Hurdles for Homebuyers
Brisbane, Australia’s third-largest city, fared the worst in the analysis, with an affordability score of just 5.77. The city’s income-draining high transport and living costs make saving for a deposit challenging. Rent consumes 34.15% of the average weekly salary of AUD 1,845, leaving Brisbane residents with only AUD 72 in monthly savings. High public transport costs, averaging AUD 197.35 per month, further add to the financial strain.
National Housing Crisis Deepens
Australia’s housing crisis persists, with a severe shortage of new homes and soaring rental costs. Vacancy rates remain low, adding further strain to the market.
As McGowan points out, the situation is particularly tough for first-time homebuyers, with many facing years of saving in a competitive market.
Amid a landscape of rising rents (35% rise since 2020), low vacancy rates, inadequate housing supply, and a projected shortfall of 257,000 new homes in the next five years - Australia's housing crisis is placing increasing pressure on both renters and homebuyers.
Which Australian capital cities can save for a house deposit the quickest?
*All currency is in AUD $
**Monthly savings for 2024 represent 0.9% of each city’s disposable income
***A higher 'Affordability Score' indicates it’s quicker to save for a house deposit based on all metrics analysed
