Shut out: Hobart homebuyers face $64k income hike

Buying a house in Chigwell is better than any other suburb when it comes to the income needed now compared to 2020. Picture: Roger Lovell

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In just five years, the income needed to pay the mortgage on a typical Hobart house has doubled.

And in some suburbs, a six-figureincrease is required just to keep pace with rising costs.

This was the “astonishing” takeaway from exclusive research by Canstar that shows the impossible challenge buyers — especially first-time buyers with tight budgets — are up against.

Following the most recent property market boom, and peak of 2021, Hobart and Tasmania recorded a number of years when prices were flat or decreasing. But this was not enough to offset the difference in income required to buy a median-value house.

In 2020, the minimum gross annual household income required to buy greater Hobart’s median value home ($505,000) was $67,546. Today that figure has surged to $131,698.

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The extra income needed for mortgage payments in Chigwell today versus five years ago is $39,786, the smallest increase in Hobart.

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Australian Bureau of Statistics figures show the average weekly full-time adult earnings in Tasmania in 2020 were $1711. The most recent figure has grown to $1975, about a 4.6 per cent increase.

Canstar director of research Sally Tindall’s concern is that this rate of growth is shutting people out of homeownership.

Ms Tindall said it creates a 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 homeownership down generations, further deepening that divide,” she said.

“It’s not an even playing field.

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

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

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Canstar director of research Sally Tindall.

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In greater Hobart, the smallest difference between 2020 and 2025 requirements was houses in Chigwell, where $39,786 extra income was needed.

The next smallest difference in income was Gagebrook ($41,088), Bridgewater ($41,676), Risdon Vale ($45,338) and New Norfolk ($46,875).

The largest difference was in Sandy Bay, a $119,922 increase, followed by Richmond (107,548), Tranmere ($107,258), Sandford ($87,851), and Taroona ($80,112).

In its research, Canstar used the Reserve Bank of Australia’s lending rate for new customers, which was 2.93 per cent in May 2020, and 5.75 per cent in May 2025, inclusive of the recent 0.25 percentage point cut.

These figures don’t consider stamp duty or any concessions that may be available to buyers.

Sandy Bay topped Canstar’s charts with the largest change in income required to service a loan.

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Derwent Finance principal and chief executive Emmanuel Marios said should this year’s forecast interest rate cuts come to fruition, they have the potential to affect borrowing power.

However, people may not continue to househunt in the same price bracket, he said.

“While some buyers will stick to their current bracket for safety, many will feel more confident stretching slightly — especially if they’ve been missing out,” Mr Marios said.

“Often repayment amounts drive their decisions more than the loan size, and that extra borrowing capacity might just be the green light they need to offer higher or consider new areas.”

Emmanuel Marios, chief executive of Derwent Finance. Picture: Breeana Dunbar

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Economist Cameron Kusher said rate cuts might help buyers, but they could also drive prices higher.

“Until we significantly boost housing supply, this problem won’t go away,” he said.