Have your wages kept pace with post-Covid growth in Geelong

The four-bedroom house at 11 Rarity St, Armstrong Creek, is listed for sale with price hopes from $649,000 to $689,000.

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The level of household income needed to comfortably afford to break in to the property market in Geelong has risen over the past five years despite home prices remaining in the doldrums.

Exclusive Canstar research reveals how much wages have failed to keep pace with the property market in the five years since the start of the pandemic.

More tellingly, it reveals how much outside of actual home prices impacts people’s ability to break in to the market.

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The figures show the level of household income to buy in a suburb of Geelong and pay less than 30 per cent on mortgage repayments has risen between about $40,000 to almost $140,000, depending on the suburb you buy in.

Four suburbs require an income of less than $100,000 – Norlane, Corio, Thomson and Whittington.

But the amount required has climbed between $37,000 and $44,000 in the past five years.

A median priced house in Armstrong Creek requires a $121,000 household income, a $51,000 increase, while a similar rise pushes the annual wage to buy in Belmont to $130,000.

A typical household income required to buy in Geelong West rose $66,000 to $158,000.

But the biggest rise was in Manifold Heights, where the median house price has reached $1.26m off the back of a sharp rise this year.

Canstar director of research Sally Tindall says generational wealth gap is widening.

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A household now needs a $235,000 income to comfortably afford to buy in this high-end suburb.

Canstar director of research Sally Tindall said the study showed the widening generational wealth gap.

“It is astonishing to see just what kind of income is required to get a foot on the property ladder these days,” Ms Tindall said.

“My concern is that this is shutting people out. It creates this divide between those already in the property market and those that are struggling to land a foot on the property ladder.

“What we are seeing anecdotally is that those families who have property are passing down the wealth they have created through home ownership down generations, further deepening that divide,” Ms Tindall said.

The three-bedroom house at 15 Lily St, Hamlyn Heights, is listed for sale with price hopes from $690,000 to $740,000.

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“The Bank of Mum and Dad is becoming more of a thing.”

At $720,000, Geelong’s median house price is 23 per cent higher than it was in 2020, even though it’s 9 per cent lower than three years ago.

Part of what was fuelling the incredible rise in property prices was the burgeoning amount of equity upgraders had behind them to channel into their next purchases, Ms Tindall said.

“Very few people have had the kind of pay rises needed to keep pace with the market. For most people, the only way they’ve kept up is because they already own property. Success breeds success.”

The problem for first-home buyers was that getting a foot on the first rung of the property ladder was becoming more challenging, robbing them of the chance to also benefit from future equity gains, she said.

The three-bedroom house at 8 Hodgson St, Geelong West, is listed for sale with price hopes from $800,000 to $880,000.

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“Fundamentally, the issue facing first-home buyers across the country is that prices are too high and their wages can’t keep up.

“There are a range of complex reasons we have this problem, but one of the primary factors is that we don’t have enough housing supply and we are not building enough to satisfy demand.”

Zippy Financial principal broker Louisa Sanghera said more buyers were amassing smaller deposits and paying lenders mortgage insurance to get in sooner.

“Waiting for a 20 per cent deposit isn’t realistic anymore,” she said. “If they wait, the market moves on without them.”

Ms Sanghera said even strong earners were hitting serviceability roadblocks.

“Banks are stress-testing at nine per cent,” she said.

“Add rising living costs, and many buyers can’t borrow what they’d hoped.”

Have your wages kept pace with post-Covid growth

Have your wages kept pace with post-Covid growth

Source: Canstar