Staggering pay rise you’d need since Covid to still afford a Sydney house

They’re the kind of pay increases that would make doctors, politicians and even some CEOs jealous – but they’ve become a necessity for those hoping to crack the housing market.

Home seekers wanting an average Sydney house will need to have boosted their income by $150,000 a year just to have kept pace with the incredible property price rises since Covid, a new study shows.

The Canstar analysis tracked the household income needed to afford a median priced Sydney home in both 2020 and 2025 – taking into account the typical loan rates being offered at the time.

The findings have laid bare the once in a generation price rises and interest rate hikes over the tumultuous period, suggesting a market that has run away from even the wealthiest professionals.

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Source: Canstar.

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With Sydney’s median price at about $950,000 in 2020, Canstar indicated that buying a typical house was affordable for a couple or individual back then with a pre-tax income of about $145,000 a year.

The minimum income required to buy an average Sydney house has since risen to nearly $290,000 a year.

It’s followed a circa 60 per cent increase in the cost of housing between 2020 and 2025, along with a nearly 4 per cent hike in interest rates – even when accounting for the two rate cuts this year.

Canstar director of research Sally Tindall said few workers saw their earnings grow fast enough to keep up with the price changes.

She pointed to ABS weekly earnings data that showed wages over the same five-year period increased by just under 16 per cent.

This incredible mismatch was leaving more people shut-out of the market and consigned to a life of renting, Ms Tindall said.

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Canstar Research Director Sally Tindall. Picture: Tim Hunter.

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

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.

“It’s not an even playing field,” she 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.”

Increases in the income needed to buy the average houses in some of Sydney’s most sought after suburbs were the most extreme, Canstar revealed.

Cracking the house market in north shore suburbs Crows Nest and Lane Cove required a yearly income roughly $300,000 higher than in 2020, while in many Harbour-suburbs the difference was $500,000.

This was for buyers with a standard loan rate and 20 per cent deposit who wanted to avoid “mortgage stress” – spending more than a third of their gross income on loan repayments.

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Source: Canstar.

Luxe areas Bellevue Hill and Dover Heights led the nation for the biggest changes since Covid, with the income needed to afford a median house up $883,000 in the former and $720,000 in the latter.

Even apartments in suburbs known as more affordable Sydney enclaves demanded wage rises that few Sydneysiders could match.

Buyers needed to earn about $30,000-$50,000 more per year than they did in 2020 to afford units in Penrith, Parramatta, Punchbowl, Seven Hills, Toongabbie and many others.

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

“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.”

Michael White, an agent with inner west group Adrian William, said first-home buyers were often adapting to the difficulties of keeping up with the market by investing in units.

These would often be kept for a few years before being resold and used as a springboard for the purchase of a family home, he said.

Natalie Wells at her Newtown unit she bought in 2019. She is surprised how much her area has changed in that time. Picture: Jonathan Ng

Natalie Wells bought a Newtown unit in late 2019, just before the pandemic hit, and said the difference between the market then and now was huge.

She is selling the Enmore Rd property, one of the few rooftop one-bedders with a wraparound balcony in the area, at auction this weekend.

“It was pretty competitive back in 2019,” she said. “I had to pay a lot more than it was worth then to secure it, but it’s nothing like the market now. Demand has changed so much for any property.

“This whole area, it used to be student bars, now it’s a mix of much more up-market places. Prices have just accelerated.

“I feel lucky my generation were able to get into the market when there wasn’t this supply and demand imbalance. Because we already own properties, it’s easier to trade in and out but worry for my kids. How are they going to do it in future?”

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