Geelong people hoping to buy a typical house need to be earning $66,000 more than they did four years ago in a stark reminder of the affordability challenge facing buyers in the city.
The double whammy of rising home prices and higher interest rates meant prospective purchasers need to be earning at least 40 per cent more in annual income from 2021 to 2024 to afford the repayments after breaking to the market in Geelong.
Despite bigger hurdle, a local expert says more first-home buyers have been active this year as a local correction in home prices meant people are getting more for their money.
But they’re not doing it without help.
The income required to buy a home in Geelong has jumped markedly in the past three years.
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New research from Finder and PropTrack showed the minimum amount a person should earn before tax to afford a house or unit in every suburb this year compared to 2021.
The data assumes a 30-year loan, a standard 20 per cent deposit and using an interest rate of 6.27 per cent in 2024 compared to 2.72 per cent in 2021.
The research showed that even in suburbs where the median house price is thousands of dollars less than in 2021, annual incomes still needed at least a 40 per cent boost to keep up with affordability.
Finder’s head of consumer research Graham Cooke says home buyers’ spending power was half what it was in 2020.
The data showed the minimum income required to a house at the City of Greater Geelong median price of $715,000 was more than $141,000.
But suburbs where the median house price is close to or below $600,000 need a typical income from $89,000 in Norlane, where the median house price is $450,000, up to $131,000 in Grovedale, where the median house price is $666,000.
Finder head of research Graham Cooke said the analysis showed home buyers’ spending power was half what it was in 2020 at the start of the pandemic.
Belmont: The three-bedroom townhouse at 1/1 Church St is selling with $795,000 to $850,000 price expectations.
“It’s no secret that housing is unaffordable but these numbers are still surprising,” he said.
“Wage growth has recently begun to increase but it’s nowhere near the level of inflation in the housing market.”
Mr Cooke said that it could take years until housing affordability improved.
“It further emphasises how many people will rely on the bank of mum and dad to get into the market,” he said.
Paul Ryan says stable employment conditions meant more people were confident to buy a home.
PropTrack economist Paul Ryan said housing affordability has deteriorated at an alarming rate since 2020.
“We’ve gone from what was probably one of the best times for affordability in 2020 to the worst in the space of four years,” he said.
Home price rises over the past four years were well above the historic trend, growing about 24 per cent faster each year than over the years from 1986 to 2019, Mr Ryan noted.
Bell Park: The four-bedroom house at 40 Maple Cres is listed for sale for $829,000 to $859,000.
Much of this growth occurred after a period of successive interest rate hikes, which was rare given that borrowing constraints normally pulled down prices, Mr Ryan said.
Prices have been rising nationally because of housing supply constraints, rapid population growth and low unemployment, Mr Ryan said.
“A big factor that is less spoken about is that we’ve had relative economic stability. The number one thing that affects someone’s decision to buy a home is their job prospects.
“For most people, they have been strong. That’s made them more confident to make long-term house decisions.”
Geelong buyers advocate Tony Slack says the majority of first-home buyers are buying as a couple, or with help from family.
Geelong buyers advocate Tony Slack said more first-home buyers had seen the slump in home prices as an opportunity, but almost none were doing it alone.
“I think they’ve realised what’s the alternative? Do they rent and go with friends in to a share house or buy a home. Especially couples, but not a lot of singles.”
Mr Slack said most were purchasing as couples and had been living at home, saving money and saw it as a relative good time to buy.
Portarlington: The five-bedroom waterside house at 26 The Esplanade is listed for sale with $2.995m to $3.294m price expectations.
“The majority of first-home buyers I’ve helped in the past 12 to 18 months have been couples. And I can confidently say those singles have nearly in every instance had family help,” he said
Properties that are turnkey, where couples can bring their furniture and enjoy living there from day one are most in demand.
Newcomb: The three-bedroom townhouse at 11A Greenwood St is selling with price expectations of $599,000 to $649,000.
“They’re the ones that the majority of buyers are keen to look at first and then the next tier down is something that needs a little bit of refurbishment.
“Basic refurbishment – carpets, paint, you know, general improvement. As far as anything major, there’s not a lot of love for those properties.”
But he said buyers with trades background have managed to secure some incredible bargains this year.
SEARCH YOUR SUBURB: WHAT YOU NEED TO EARN TO AFFORD A TYPICAL HOUSE OR UNIT IN GEELONG
| Suburb (property type) | Min. income, July 2021 | Min. income July 2024 | % change |
| Aireys Inlet (H) | $176,976 | $302,586 | 71% |
| Anglesea (H) | $157,326 | $291,233 | 85% |
| Armstrong Creek (H) | $77,785 | $132,289 | 70% |
| Bannockburn (H) | $83,933 | $150,256 | 79% |
| Barwon Heads (H) | $182,506 | $334,671 | 83% |
| Barwon Heads (U) | $127,852 | $203,369 | 59% |
| Batesford (H) | $178,928 | $341,088 | 91% |
| Bell Park (H) | $71,571 | $124,391 | 74% |
| Bell Park (H) | $71,571 | $124,391 | 74% |
| Bell Park (U) | $57,465 | $105,140 | 83% |
| Bell Park (U) | $57,465 | $105,140 | 83% |
| Bell Post Hill (H) | $71,246 | $128,340 | 80% |
| Bellbrae (H) | $250,369 | $473,870 | 89% |
| Belmont (H) | $86,536 | $135,250 | 56% |
| Belmont (U) | $63,763 | $105,387 | 65% |
| Birregurra (H) | $85,885 | $148,084 | 72% |
| Breakwater (H) | $61,811 | $113,531 | 84% |
| Charlemont (H) | $72,872 | $118,468 | 63% |
| Clifton Springs (H) | $75,605 | $134,263 | 78% |
| Connewarre (H) | $208,207 | $418,585 | 101% |
| Corio (H) | $53,613 | $95,761 | 79% |
| Corio (U) | $41,641 | $74,783 | 80% |
| Curlewis (H) | $79,379 | $131,302 | 65% |
| Dereel (H) | $63,763 | $109,582 | 72% |
| Drysdale (H) | $88,488 | $151,046 | 71% |
| Drysdale (U) | $59,859 | $108,595 | 81% |
| East Geelong (H) | $103,453 | $154,008 | 49% |
| East Geelong (U) | N/A | $107,608 | N/A |
| Fyansford (H) | $104,168 | $184,612 | 77% |
| Geelong (H) | $113,668 | $197,446 | 74% |
| Geelong (U) | $82,307 | $124,885 | 52% |
| Geelong West (H) | $105,242 | $173,752 | 65% |
| Geelong West (U) | $76,451 | $107,114 | 40% |
| Grovedale (H) | $75,605 | $131,499 | 74% |
| Grovedale (U) | $63,763 | $97,736 | 53% |
| Hamlyn Heights (H) | $81,168 | $148,084 | 82% |
| Hamlyn Heights (U) | $66,886 | $103,955 | 55% |
| Herne Hill (H) | $86,536 | $136,336 | 58% |
| Herne Hill (U) | $40,600 | $77,300 | 90% |
| Highton (H) | $107,357 | $181,453 | 69% |
| Highton (U) | $63,763 | $102,672 | 61% |
| Indented Head (H) | $87,512 | $187,574 | 114% |
| Jan Juc (H) | $167,541 | $251,250 | 50% |
| Lara (H) | $78,078 | $138,212 | 77% |
| Lara (U) | $53,353 | $96,650 | 81% |
| Leopold (H) | $75,540 | $133,789 | 77% |
| Leopold (U) | $59,152 | $94,774 | 60% |
| Lethbridge (H) | $101,501 | $170,346 | 68% |
| Little River (H) | $165,264 | $219,165 | 33% |
| Lorne (H) | $195,194 | $377,122 | 93% |
| Lorne (U) | $107,357 | $256,186 | 139% |
| Lovely Banks (H) | $87,187 | $145,123 | 66% |
| Manifold Heights (H) | $112,236 | $211,761 | 89% |
| Manifold Heights (U) | $55,435 | $98,723 | 78% |
| Marshall (H) | $69,782 | $123,897 | 78% |
| Marshall (U) | N/A | $95,761 | N/A |
| Moolap (H) | N/A | $215,216 | N/A |
| Mount Duneed (H) | $81,331 | $140,187 | 72% |
| Newcomb (H) | $68,318 | $113,334 | 66% |
| Newcomb (U) | $54,004 | $91,417 | 69% |
| Newtown (H) | $129,967 | $227,063 | 75% |
| Newtown (U) | $70,107 | $118,270 | 69% |
| Norlane (H) | $53,646 | $89,591 | 67% |
| Norlane (U) | $44,895 | $79,966 | 78% |
| North Geelong (H) | $71,571 | $124,638 | 74% |
| Ocean Grove (H) | $113,212 | $192,510 | 70% |
| Ocean Grove (U) | $97,597 | $155,489 | 59% |
| Point Lonsdale (H) | $129,999 | $232,986 | 79% |
| Portarlington (H) | $98,248 | $197,446 | 101% |
| Portarlington (U) | $83,283 | $155,982 | 87% |
| Queenscliff (H) | $154,854 | $291,726 | 88% |
| Rippleside (H) | $106,706 | $207,318 | 94% |
| South Geelong (H) | $126,876 | $178,195 | 40% |
| St Albans Park (H) | $68,968 | $113,531 | 65% |
| St Leonards (H) | $83,933 | $148,084 | 76% |
| St Leonards (U) | $63,503 | $112,544 | 77% |
| Teesdale (H) | $87,837 | $196,459 | 124% |
| Thomson (H) | $57,485 | $103,166 | 79% |
| Torquay (H) | $126,030 | $238,910 | 90% |
| Torquay (U) | $100,850 | $212,254 | 110% |
| Wandana Heights (H) | $109,927 | $197,051 | 79% |
| Waurn Ponds (H) | $91,741 | $155,982 | 70% |
| Whittington (H) | $56,997 | $98,723 | 73% |
| Whittington (U) | $45,591 | $79,176 | 74% |
| Winchelsea (H) | $63,633 | $136,731 | 115% |
Source: Finder, PropTrack. Minimum jump in income required to afford a house or unit at the median price between July 2021 and 2024. The data assumes a 30-year loan, a standard 20 per cent deposit and uses an interest rate of 6.27 per cent in 2024 and 2.72 per cent in 2021.
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