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Finder’s RBA Survey: $171K is the minimum income needed to afford average Aussie house

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The RBA has held the cash rate for the third time in a row while the cost of living pressure experienced by Aussie households continues to sit in the 'extreme' range.

In this month's Finder RBA Cash Rate Survey™, 36 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.

All experts correctly predicted a cash rate hold – keeping it at 4.35% in May.

Graham Cooke, head of consumer research at Finder, said Australians holding out for a rate cut could be waiting a while.

"Homeowners are doing it tough and are looking for any reprieve they can get.

"Finder's Cost of Living Pressure Gauge shows households are nearing the top of their financial limit. Over a third (36%) of homeowners said they struggled to pay their mortgage in April, while for renters the number was even higher at 42%."

"NIMBYism" drives up house prices

The majority of panellists who weighed in* (58% 15/26) said that NIMBYism, those who have a 'Not in My Backyard' sentiment toward development, has driven property prices higher than they otherwise would be.

"The NIMBY attitude has pushed high-density housing further and further out of city centres, putting pressure on public transport and keeping inner-city properties at sky-high prices," said Graham Cooke.

Leanne Pilkington from Laing+Simmons said new housing supply has lagged demand for years and the widening gap is the main cause of the housing affordability crisis.

"People are understandably protective of their patch but too many Councils have passed the buck on new housing delivery," Pilkington said.

Rich Harvey from Propertybuyer said NIMBYism is prolific throughout established blue chip suburbs of Melbourne and Sydney.

"Everyone wants more affordable housing and better quality medium density…but just not in their backyard," Harvey said.

Tim Reardon from the Housing Industry Association said constraints on home building have caused an undersupply, leading to high rents and house price growth.

"It is not the only reason, but it is a key issue," Reardon said.

Most experts agreed that tight government regulation and constraints on home building have had a larger effect on house prices.

Finder reveals the minimum household income needed to afford a property

Property affordability continues to present a significant challenge, according to new Finder analysis.

The analysis shows the minimum household income required to afford the average Australian house price is $171,223.

To afford an average unit, Aussies need to earn at least $120,598 as a household.

The average full-time worker earns $98,218 per year, according to the ABS ($1,888.80 per week).

Minimum household income required to afford average Australian house and unit

PriceMinimum income required
National average house price$867,188$171,223
National average unit price$610,789$120,598
Source: Finder analysis of CoreLogic data
Calculations are based on the average variable home loan interest rate, a 80% loan to value ratio with a 20% deposit, and 30% of gross income as the threshold for mortgage stress.

Houses: Minimum income required to afford a house in Australia's capital cities

Those looking to buy a house in the country's largest capital cities will need to be earning a significant amount.

Prospective homebuyers in Sydney will need an average minimum household income of $263,195 to comfortably service their mortgage.

In Melbourne they would need a yearly salary of $169,804.

In Brisbane, the minimum income required to purchase a house is $165,312, while in Canberra they would need $185,599.

Minimum household income required to afford a house

LocationPriceMinimum income required
Source: Finder analysis of CoreLogic data
Calculations are based on the average variable home loan interest rate, a 80% loan to value ratio with a 20% deposit, and 30% of gross income as the threshold for mortgage stress.

Graham Cooke said the data paints a worrying picture for prospective buyers.

"Many Australians dream of owning their own home, but it's becoming increasingly difficult to get your foot in the door.

"Those living in major capital cities now require a substantial household income just to be able to comfortably service the average mortgage, without even considering saving for a deposit," Cooke said.

Units: Minimum income required to afford a unit in Australia's capital cities

Sydney is again the most expensive city, with prospective homeowners requiring a minimum household salary of $149,072 to afford a unit.

Melbourne follows behind, with potential buyers looking at an income of $121,429 to meet mortgage affordability.

To comfortably afford a unit in Brisbane, buyers need a minimum yearly wage of $108,595, while in Canberra they'll need $118,073.

Minimum household income required to afford a unit

LocationPriceMinimum income required
Source: Finder analysis of CoreLogic data
Calculations are based on the average variable home loan interest rate, a 80% loan to value ratio with a 20% deposit, and 30% of gross income as the threshold for mortgage stress.

*Experts are not required to answer every question in the survey

Here's what our experts had to say:

Nicholas Gruen, Lateral Economics (Hold): "Right now there's a tug of war between hoping that we've got through, and, with recent data, worrying that we haven't. That puts paid to the scope for rate cuts in the next few months but whether the next move is up or down depends on how that question is answered. But recently the likelihood that the next move is down has been taking on water."

Matthew Greenwood-Nimmo, University of Melbourne (Hold): "Inflation is proving stubborn, so I think the RBA will keep the cash rate on hold for now."

Andrew Wilson, My Housing Market (Hold): "Data clearly pointing to increased likelihood of higher near-term RBA rates with continued higher housing, fuel and energy costs to drive more rises in inflation and well above target range. RBA set to play catch-up after leaving rates too low for too long in 2023 - and can only rationally reach its target by significantly reducing demand in a still booming economy."

Malcolm Wood, Ord Minnett (Hold): "Sticky inflation, fiscal stimulus, re-regulation."

Cameron Kusher, REA Group (Hold): "I think the RBA will re-enter a hiking bias in the latest minutes due to the stronger than anticipated CPI numbers but I don't see them hiking yet. Equally the strong CPI and the looming tax cuts, plus whatever is announced in the Federal Budget is likely to push rate cuts out further."

Mark Crosby, Monash University (Hold): "With inflation falling only slowly but getting closer to target rates should stay on hold for the foreseeable future."

Stella Huangfu, University of Sydney (Hold): "We've received conflicting information about the current inflation situation in Australia. On one hand, the Consumer Price Index (CPI) increased by 1.0% in the first quarter, and over the twelve months leading to the March 2024 quarter, it rose by 3.6%, slightly higher than the expectations of most economists (3.5%). On the other hand, Australian retail sales unexpectedly declined by 0.4% in March from February, as cautious consumers reduced spending, resulting in the slowest annual sales growth in over two years. The RBA will carefully consider these factors before making any decisions regarding interest rates. I anticipate they'll hold off and wait until more data becomes available before making any decisions."

Garry Barrett, University of Sydney (Hold): "Easing of growth in retail expenditures."

Mala Raghavan, University of Tasmania (Hold): "While inflation is currently on a downward trend, the current economic indicators suggest that there isn't a compelling reason for the Reserve Bank of Australia (RBA) to lower the cash rate. Inflation remains above the target range of 2-3%. The unemployment rate has seen a decrease, while the Australian dollar is depreciating, and both businesses and households seem to be adapting well to the prevailing interest rates. Hence, given the overall resilience of the economy, the RBA may opt to maintain the cash rate at its current level."

Devika Shivadekar, RSM Australia (Hold): "Concerns among policymakers about persistent inflation are well-founded. Our base case is for the RBA to pivot in 3Q24 but we acknowledge the increasing risk of that being pushed into 4Q24. Upside risks to inflation stem from rising fuel prices from geopolitical tensions and potential inflationary effects of the Federal Budget and Stage 3 tax cuts."

Stephen Koukoulas, Market Economics (Hold): "Falling inflation, rising unemployment."

Geoffrey Kingston, Macquarie University Business School (Hold): "The CPI report for the March quarter was ugly. News from overseas was similarly bad. On the other hand, March retail sales were weak. The Bank will probably sit on its hands for several months. However, ongoing high government spending and the July tax cuts may combine to force a rate rise sometime this summer."

Harry Murphy Cruise, Moody's Analytics (Hold): "Australia is joining a growing list of economies proving that the final mile of bringing down inflation is the hardest. Having sprinted lower in the back end of 2023, headline inflation is struggling to keep that momentum going. Inflation will keep easing from here, but progress will be slow. From 3.6% in the March quarter, we see inflation ending the year at 3.2% and returning to the top of the Reserve Bank of Australia's target band of 2% to 3% in the first half of 2025. Of course, there are risks. Looming stage-three tax cuts due to start in July will keep the RBA on its toes; those tax cuts will add money to the economy at the same time as the RBA is trying to take it out. What's more, a chunk of progress on inflation has come from temporary government rebates that will eventually unwind. Those aren't deal-breakers for the RBA, but they will delay rate cuts. We had expected the first rate cut to come in September. Increasingly, it's looking like we'll have to wait until December."

Tomasz Wozniak, University of Melbourne (Hold): "Upward pressure mounts! As per my analysis using over 200 weekly and monthly multivariate models, the forecast intervals indicate a HOLD decision for the following year. However, there is a notable difference this time around. Opposite to the last three forecasts done from December, this month's analysis shows that the probability of an increase is over twice as high as that of a cut. You can access these forecasts at"

Sean Langcake, Oxford Economics Australia (Hold): "The Q1 inflation data were stronger than expected, pointing to a concerning path ahead for Australia's disinflation cycle. Price pressures are broad, as evidenced by the increase in trimmed mean inflation. And elevated unit labour cost growth will keep upward pressure on inflation. But we expect the RBA will stay the course and keep rates on hold until late 2024. Demand growth is clearly weak, which will eventually translate to slower inflation. A hike in response to the inflation data would be a big change in their reaction function."

Leanne Pilkington, Laing+Simmons (Hold): "Inflation continues to ease and would be declining at a greater pace if not for the high cost of housing, which is being driven by necessity or, in the case of many renters, out of desperation. The Reserve Bank must not add to the cost of living pressure people are experiencing, especially vulnerable people."

Anthony Waldron, Mortgage Choice (Hold): "The RBA has made it clear its priority is to return inflation to target. Given the March 2024 quarter Consumer Price Index (CPI) shows annual inflation remains higher than expected, I predict the cash rate will remain on hold in May."

Rich Harvey, Propertybuyer (Hold): "Recent CPI figures show that service inflation is being particularly sticky which has made economists revise their earlier interest rate forecasts saying higher than expected inflation for longer."

Kyle Rodda, (Hold): "While weaker household activity is likely to keep the RBA from lifting rates further, inflation is too stubborn for the central bank to consider lowering rates in the near future."

Evgenia Dechter, UNSW (Hold): "The recent inflation measure was slightly higher than expected, the unemployment rate has been relatively stable, and aggregate indicators suggest an economic slowdown. With stabilisation still ongoing, no changes to the cash rate are expected this round."

Mathew Tiller, LJ Hooker Group (Hold): "Inflation continues to trend lower on an annual basis; however, the higher-than-expected March 2024 quarterly CPI data result means that the RBA will be cautious about cutting rates too soon. Therefore, it's likely that the RBA will hold the cash rate steady for the majority of 2024."

Cameron Murray, Fresh Economic Thinking (Hold): "Although some indicators of economic activity are softening, they are not in the US, and inflation remains above the target level."

Dale Gillham, Wealth Within (Hold): "The RBA knows that movements in rates take 12 months to really filter through the economy. Despite a 0.1% rise in inflation, we are seeing the effects of those consistent rate rises and I don't think one slight rise in inflation is justification for more rises."

Tim Reardon, Housing Industry Association (Hold): "Embedded inflationary impact is evident. Ongoing strong population growth, very low unemployment being sustained due to fiscal expenditure, especially in non-residential construction and mining sector employment. Elevated rental price growth and housing costs will remain key drivers of inflation. These factors will keep demand sufficiently high to ward off a return to the target band."

Tim Nelson, Griffith University (Hold): "Inflation still outside the target zone but trending down."

Adj Prof Noel Whittaker, QUT (Hold): "The pressure on families is continuing to grow, but the inflation trend is still down. This is why the bank will hold rates at this meeting."

Peter Boehm, Pathfinder Consulting (Hold): "Whilst it is good news inflation appears to be reducing year on year, the quarterly result of 1% (annualised at around 4%) is not so good. Inflation appears to be quite sticky. There is a possibility for a rate increase later in the year if inflation remains above the targeted range. More time is needed to show a sustained downward trend in inflation - we aren't there yet. I am hopeful of a rate cut possibly at the end of 2024 or first quarter 2025."

Jakob Madsen, University of Western Australia (Hold): "Inflation is coming towards the accepted range and economic activity is not showing any drastic change."

Sveta Angelopoulos, RMIT University (School of Economics, Finance and Marketing) (Hold): "Although the annual change continues on a downward trajectory, the increase from the previous quarter suggests that inflationary pressures in the economy are continuing. The RBA is likely to continue to hold. The movements in the next couple of quarters will provide a clearer indication if rate cuts may still be possible later this year or will be delayed to 2025."

Stephen Miller, GSFM (Hold): "Slow progress on inflation (compared to forecast) means no cut until November."

Saul Eslake, Corinna Economic Advisory Pty Ltd (Hold): "The March quarter CPI data should have put paid to whatever hopes others (including the financial markets) had that the RBA might cut rates this year. The RBA was later than its peers in starting to raise rates, and has raised them by less than its peers - it stands to reason that it will therefore be later than its peers to start cutting rates. Especially when you also factor in (as the RBA will have done) that Australian households will be getting tax cuts equivalent (in terms of their impact on aggregate household cash flows) to two 25 bp rate cuts from 1st July."

David Robertson, Bendigo Bank (Hold): "Stubbornly high core inflation leaves the RBA with no choice but to maintain tight monetary policy, so we still expect the cash rate to remain at 4.35% throughout 2024. Rate cuts early next year are still likely, but their timing will be data (and demand) dependent."

Jeffrey Sheen, Macquarie University (Hold): "Inflation continues to decline, including for services. Though the labour market is tight right now, I expect a slow rise in unemployment and weak GDP growth through to October, which would then allow a 25 basis point cut in the cash rate in November."

Shane Oliver, AMP (Hold): "Inflation is still coming down so we still expect a rate cut this year, but March quarter inflation was higher than expected particularly for services inflation and so we have delayed our expectation for the first rate cut to year end."

James Morley, The University of Sydney (Hold): "Given low unemployment and inflation still running above the 2-3% target range, but close to the RBA's forecast, it is a near certainty that the RBA will hold at the May meeting. I also anticipate they will continue to hold until possibly December if further progress is made on inflation towards target in Q2 and Q3 and labour market tightness eases. The upcoming implementation of the Stage 3 tax cuts, which are accounted for in the RBA forecast, basically guarantee that they won't cut in the next few meetings. An increase in rates is also unlikely even if headline inflation bounces back up a bit because the RBA will anticipate the effects of past rate increases will continue to soften household spending, especially as even more homeowners come off of low fixed-rate mortgages."

Richard Holden, UNSW (Hold): "Inflation is still high and sticky."

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