Which of Australia’s capital cities have the most affordable mortgages?

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Affordability is about more than just the price of a house. Monthly mortgage repayments and house price-to-income ratios also dictate how affordable a property is.

In this post, we compare the cost of a mortgage in Australia’s capital cities.

What is the average price of a mortgage in Australian cities?

At the end of June 2017, CoreLogic RP Data recorded the following median property values nationwide:

  • Sydney: $1,219,570
  • Melbourne: $980,420
  • Brisbane: $558,550
  • Adelaide: $495,160
  • Perth: $584,930
  • Darwin: $486,520
  • Canberra: $733,510
  • Hobart: $386,720

Evidently, the cities of Hobart, Darwin and Adelaide are at the cheaper end of the spectrum, while Sydney – no surprise – continues to have the highest house values. From this data alone, Sydney and Melbourne appear to be the least affordable cities. But median property values are not the only indication of an area’s affordability.

blaNo surprises – Sydney has the highest house prices and monthly mortgage repayments of all Australian capital cities.

What are monthly mortgage repayments costing us?

The median monthly mortgage repayment Australia-wide is $1,755, but taking out a home loan in some cities (for example, Adelaide and Hobart) will cost you less than in others. Here’s what you can expect to put towards your mortgage each month, according to 2016 Census data:

  • Sydney: $2,500
  • Melbourne: $2,000
  • Brisbane: $2,167
  • Adelaide: $1,733
  • Perth: $2,042
  • Darwin: $2,167
  • Canberra: $2,058
  • Hobart: $1,733

Clearly, house price isn’t everything – despite having the second highest median house value, Melbourne’s monthly mortgage repayments are actually lower than those in Brisbane, Perth, Darwin and Canberra.

Which capital cities have the lowest house price-to-income ratios? 

When looking at affordability, it’s important to not only focus on house value and monthly mortgage repayments, but also house price-to-income ratios. In other words, the proportion of your earnings that goes towards paying off your home.

In terms of house price-to-income ratios, Sydney faces the greatest affordability challenge, according to Housing Industry Association (HIA) research from 2016. It found that Sydneysiders who owned detached houses were putting nearly 60 per cent of their gross average earning towards repayments. Affordability was significantly better for those living in apartments, however, who only put 44.3 per cent of their earnings towards mortgage repayments.

blaGetting a mortgage in Perth is much more affordable than in most other Australian capitals.

Perth is one of the most affordable Australian cities on the basis of house price-to-income ratios according to the HIA’s statistics. While monthly mortgage repayments in Western Australia’s capital are over $2,000, taking out a home loan in Perth is much more affordable than other Australian capitals when you consider that only 33.3 per cent of income goes towards mortgage repayments for houses, and 26 per cent for units.

Need help finding an affordable place to buy a home in Australia?

No matter where you want to move, your Smartline Adviser can help you find a home loan that suits your needs and financial situation. Contact us today!

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