The mid-priced home for Joe and Jill Average has just hit $800,000

If you want to buy the median priced home in Australia, you’ll now need to rustle up $800,000.

The latest PropTrack Home Price Index report has revealed that home prices hit a record level in November, up 5.5 per cent on a year ago.

While price growth is easing, prices in Perth, Adelaide and Brisbane continue to far exceed average income growth and fuel the national price gains.

Australian wages grew by 3.5 per cent in the year to the September quarter 2024.

For those trying to get a foot on the property ladder or investors who have been waiting for a better time to buy, they’ve seen prices skyrocket in the mid-sized capitals well beyond their modest earnings increases.

Perth real estate leapt 18.7 per cent, Adelaide 14.6 per cent and Brisbane 12.6 per cent. Even Sydney, which has slowed appreciably in 2024 since soaring in previous years, saw prices eclipse income gains by just over 1 per cent.

Those timing the market fared better in the other major cities, with Melbourne property prices slipping in 2024 and now 4.4 per cent below their peak. Hobart, Darwin and Canberra each recorded modest annual price growth but still below the average wage increase.

Report author Eleanor Creagh, Senior Economist for the REA Group, said Australian home prices hit a new peak in November after 23 consecutive months of growth.

“While housing demand has remained resilient to persistent affordability constraints, we have seen the pace of home price growth slow since earlier in the year.

“This softening in growth has occurred alongside a surge in stock for sale, giving buyers more choice and reducing the urgency to transact, however, performance has varied across markets with differing supply and demand conditions.”

According to data released by SQM Research on Tuesday (3 December), total nationwide residential property listings rose by 7.6 per cent over the month of November 2024, to 272,645 listed residential properties.

“The increase in properties hitting the market this year has been met with strong demand, but increased stock for sale has been a contributor to slowing price growth, along with affordability constraints and the sustained higher interest rate environment,” Ms Creagh said.

“In the period ahead, home prices are expected to lift, though the pace is expected to remain softer, trailing the strong growth in prices over recent years.”

According to PropTrack, after a two-and-a-half year decline Hobart was the surprise leader in terms of median dwelling value growth in November, ahead of usual candidates Perth, Brisbane and Adelaide.

What it takes to buy the ‘average’ home

With the average home now costing $800,000 and the affordability index dropping by 25 per cent over the last five years, Australian house prices are now among the least affordable in the economic bloc of more than 30 OECD countries.

Shockingly, only 10 per cent of Australian homes are affordable for average-income earners, according to a recent report by ANZ and CoreLogic.

To buy an $800,000 home without going into mortgage stress whereby loan commitments exceed 30 per cent of income, it works out to be an annual income of $178,160.04 in order to comfortably pay off that mortgage. Shared down the middle, two people would need to be earning $89,080 each year.

A standard 20 per cent deposit for an $800,000 home equates to a hefty $160,000.

Using API Magazine’s property finance calculator, the monthly instalment after the deposit for an owner-occupier paying principal and interest on a 25 year loan at the average variable interest rate of 6.83 per cent on a $640,000 home loan would be $5,568 per month.

Finding almost $67,000 a year for the mortgage is beyond the reach of many. And for first home buyers it’s even worse, with the average loan-to-income ratio for first-time buyers having increased from 3.5-times to 4.5-times over the past three years.

Affordability stifling further growth

There are signs now that property price growth around the country is grinding to a halt.

CoreLogic’s Home Value Index showed a November gain of a mere 0.1 per cent, slightly below PropTrack’s 0.15 per cent.

A surge in new listing volumes through spring, interest rates showing little sign of easing, and prices now demonstrably unaffordable for most prospective buyers, price pressure is easing.

The increase in stock for sale has seen the pace of price growth slow in Brisbane, Adelaide, Sydney and Melbourne, the latter of which is also weighed down by higher property taxes.

Perth led the rise in total listings with a significant monthly increase of 20.0 per cent, followed by Adelaide at 16.7 per cent, and Hobart with a 12.2 per cent rise. Canberra and Brisbane also recorded increases of 8.3 per cent and 8.5 per cent, respectively. Melbourne recorded a rise of 6.2 per cent, while Sydney had a smaller increase of 4.7 per cent. Conversely, Darwin was the only city to see a decrease, with listings down by 2.7 per cent.

Ms Creagh said the state capitals were definitely levelling out.

“In Sydney, greater stock for sale has been a contributor to the sharp slowing of price growth, along with affordability constraints and the sustained higher interest rate environment.

“Price momentum has been weaker in Melbourne over the past four years in part due to greater buyer choice and higher property taxes and, additionally, construction activity in Victoria has aligned more closely with population growth over the past decade.”

Adelaide remained one of the country’s top performing markets in November.

“Although the number of properties hitting the market has increased through spring, total stock on market remains constrained as new listings are quickly absorbed amid strong buyer demand,” Ms Creagh said.

“The comparative affordability of the city’s homes has contributed to persistently strong growth of recent years, though the pace of price growth is slowing with affordability having deteriorated significantly and the higher interest rate environment persisting.”

She said sellers in Perth have held the upper hand through spring and although the number of properties hitting the market has increased, total stock on market remains historically low as new listings are quickly absorbed amid strong buyer demand.

“Despite remaining the top performing market for annual home price growth, growth has slowed over the past quarter in line with the slowing momentum seen in other markets.”

For those still trying to time the market, it may be too little too late.