Higher interest rates make Brisbane Australia’s toughest property market for couples to buy

Compare the Market property expert Andrew Winter

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Brisbane has earned the shock title of Australia’s least affordable capital for couples trying to buy a home.

A damning analysis of national income and house price data by Compare the Market shows falling home values have failed to improve affordability, with larger loans and higher interest rates leaving working Queenslanders still unable to buy median-priced homes in most suburbs.

The study from the upcoming Household Budget Barometer shows just 12.76 per cent of Greater Brisbane suburbs remain affordable for first-home buyers on two average salaries — marking a sharp decline even from last year when couples could buy in 43.43 per cent of suburbs.

Steep loan repayments and a lack of supply have locked buyers out of the River City housing market

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It makes the Sunshine State capital the hardest market in the country for dual-income households to crack, followed by Adelaide, where 14.95 per cent of suburbs are still affordable, then Sydney at 16.88 per cent and Perth, 22.11 per cent.

The analysis covered 3,363 suburbs nationwide and compared estimated repayments with median earnings, assuming an 80 per cent loan-to-value ratio.

A property was considered affordable where repayments did not exceed 30 per cent of household income.

For a typical Brisbane couple earning a combined median income of roughly $149,000 a year, that maximum monthly budget sits at around $3,741.

Andrew Winter: Affordability is ‘extremely low’. Picture: Supplied

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Meanwhile, not one Greater Brisbane suburb was classified as affordable on an average single income, leaving solo buyers without a hefty cash deposit or family help entirely locked out.

Compare the Market property expert Andrew Winter said these buyers were left to compete for the cheapest units against couples priced out of bigger houses and more desirable locations.

“It’s a weird time. Property values are coming down, which should make homes more affordable, but higher interest rates are wiping those gains by squeezing borrowing power,” Mr Winter said.

“Meanwhile, the supply of properties that are accessible to people on a single salary is extremely limited.”

A handful of units on Brisbane’s southern fringe remain affordable

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Nationwide, buyers earning two average salaries could afford at least one property type — mostly units — in 38.61 per cent of suburbs, compared with 53.63 per cent last year.

“Affordability in the market is extremely low, and that makes it very important to understand your borrowing capacity because, if something were to happen — one of you lost your job or needed a career break at some point — there’s very little wiggle room between your income and your repayments,” Mr Winter said.

Separate figures from PRD Real Estate reveal the alarming parallel for existing homeowners now contending with higher interest rates.

PRD’s Australian Economic and Property Report found mortgage repayments now consume a record 50.9 per cent of family income, as four interest rate hikes this year and growing loan sizes push affordability to breaking point.

The blue-chip inner ring is off-limits for most buyers

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“There is no doubt that the economy is feeling the pressure,” PRD chief economist Dr Diaswati Mardiasmo said.

“In the real estate world, we are seeing this translate into longer days on market and, in some areas, a softening in median house and unit prices.”

Greater Brisbane’s cheapest remaining suburbs for houses were Russell Island (where a $537,963 median value demands a manageable $2,627 in monthly repayments), neighbouring Macleay Island ($607,960) and regional Toogoolawah ($615,770).

For units, a handful of southern suburbs like Logan Central, Woodridge, and Slacks Creek remained affordable for couples with prices under $600,000.

By contrast, living Brisbane’s blue-chip inner ring has become off-limits for most.

A typical house in New Farm now costs an eye-watering $3.32m, demanding monthly repayments of more than $16,200.