Melbourne is Australia’s most affordable city during a housing crisis

Melbourne is by far the most affordable major city in Australia for renters and even potential home or unit buyers during a cost of living crisis, according to new data.

The influx of students and international migrants has not driven up rents in the Victorian capital to the same extent as Sydney.

Residents of an inner-city suburb, a short tram ride from the city, typically spend just 24 per cent of their income on rent, compared to 43 per cent in a Sydney suburb a similar distance from the CBD.

A middle-income earner wanting to buy a house 20km out of town also has options in Melbourne without worrying about mortgage stress, which would be impossible in Sydney.

Melbourne’s median weekly rent of $529 in August was still significantly cheaper than Sydney’s of $666.39, even though both cities are home to a larger share of permanent and long-term newcomers to the stranger.

It’s also cheaper than the rent for an equivalent Brisbane apartment of $544.72, in a city that receives a larger share of interstate migration, according to data from SQM Research.

But when rents in some suburbs are compared with median household incomes from the 2021 census, Melbourne is by far the cheapest place for inner-city renters, despite increases of more than 20% over the past year. of the past year.

The gentrified areas of the city center were particularly affordable for professionals who generally earn more money.

Managing director and founder of SQM Research, Louis Christopher, said that unlike Sydney, Melbourne had built new, high-density apartments close to the city center in places like Docklands and Southbank, which meant that it could accommodate an influx of new residents at a more affordable price.

“Over the long term, Melbourne has been more successful than Sydney in terms of market supply,” he told Daily Mail Australia.

“There are more high-density accommodations that have managed to accommodate large numbers of students in Melbourne – Sydney doesn’t really have that.”

In Carlton North, the median apartment rent was $573 per week in a suburb where $2,400 is the median household income.

This means that rent consumes 24 per cent of income, which is still below the Australian Bureau of Statistics’ 30 per cent threshold for rental stress.

Rents in the 3054 zip code are indeed cheaper than they were in February 2020, shortly before the pandemic, when tenants paid $693 a week in a suburb 4 km from the city center.

Sydney is significantly more expensive when the median weekly rent is compared to the median household income of a suburb based on 2021 census data.

Zetland, to the south of the city, is the same distance from the city center as Carlton North is to Melbourne’s central business district.

Median rents here are a very expensive $949 in a suburb where the median weekly household income is $2,192.

A person living in the 2017 zip code would most likely face rental stress, with a lease consuming 43% of their income.

In Brisbane, Dutton Park, 4km south of the city centre, has an average weekly rent of $608 in a suburb with a typical household income of $1,739.

Rent in the 4102 zip code would be 35 percent of household income.

An average full-time worker earning $95,581 a year also has more choices when it comes to buying a house or home without facing mortgage stress, defined as owing the bank six or more times what ‘he wins.

Broadmeadows, 23km north of the city, has a median house price of $571,184, which is significantly lower than greater Melbourne’s midpoint of $923,881, according to CoreLogic data.

With a 20 percent deposit of $114,237, the average earner with a mortgage of $456,947 would have a manageable debt ratio of 4.8.

Someone wanting a flat in a desirable location near the water can try St Kilda, 7km from town, where $537,922 is the midpoint, a tier below greater Melbourne’s median unit price of 603,829 $.

That would be impossible in Sydney, where houses and accommodation are expensive for the average income who buys on their own.

A house in Bankstown, 22km southwest of the city, typically costs $1,287,980, down from Greater Sydney’s midpoint of $1.334 million.

A middle-income worker with a deposit of $257,596 and a mortgage of $1.030 million would have a dangerous debt-to-income ratio of 10.8.

A combined income of $171,731 would be needed to fall below the “six” mortgage stress threshold in a city.

Apartments close to town or the water are also expensive in Sydney.

Hillsdale, a less fashionable suburb between the airport and Maroubra Beach, has a median price for apartments of $741,060, which is lower than greater Sydney’s median price of $817,059.

With a 20 percent mortgage deposit of $148,212, a mortgage of $592,848 would yield a debt-to-income ratio of 6.2, putting it in the stress category.

Brisbane’s far south has suburbs with median property prices below $600,000, including Browns Plains, 17 miles from the city, where the median price is $556,302.

That’s well below greater Brisbane’s $819,932.

Units near Brisbane River and the city are still affordable, with South Brisbane having a median unit price of $591,314, which is higher than the city’s median price of $520,346.

The Reserve Bank of Australia’s 12 interest rate hikes since May 2022 have had less of an effect in Melbourne because prices have not risen to the same extent as Sydney and Brisbane during the pandemic, when the spot rate was at an all-time high of 0.1 percent. hundred.

Melbourne, under Labor Prime Minister Daniel Andrews, also had the longest lockdowns in the world, with 246 days of tough restrictions that saw people leave Victoria for Queensland.

“The evidence clearly shows that there was an interstate migration flow from Victoria – it really started to ramp up during Covid,” Mr Christopher said.

“In absolute numbers, Melbourne rents have gone up, Melbourne house prices have gone up, but not as much as Sydney – there has been additional placement in the Melbourne accommodation market.”