Housing costs pressure families
March 12, 2007 11:39am
COUPLES need to earn a colossal combined income of up to $145,000 just to keep up with the mortgage payments on an average-priced Australian home, according to new research.
The figures are the result of an analysis of household budgets by the Labor Party, based on Reserve Bank data.
Meanwhile another report out today has found that first-home buyers are having to quit their jobs and move to regional centres, as house prices in capital cities becomes too expensive.
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Victorian couples need to earn almost $110,000 a year in combined income to afford the mortgage payments on an average-priced Melbourne home worth $391,000.
A decade ago, a couple needed just $43,000 to service the payments on a mortgage for an average Melbourne home.
The average annual adult wage has increased from $38,000 to $56,00 in the same period.
Families in Sydney, where the median-priced home is $520,000, require a combined income of $145,000 to keep up with their mortgage payments.
In 1996, South Australian households only needed an income of about $30,000 to keep up with mortgage repayments on a median-priced $110,000 home.
But that figure more than doubled to $79,554 in 2006 for a median-priced home worth $285,100.
Labor's Treasury spokesman, Wayne Swan, said the Opposition's analysis confirmed that Australian families needed a six-figure income just to keep their heads above monthly mortgage payments.
"The analysis shows that eight consecutive interest rate rises under John Howard have all but buried the Australian dream of the Hills hoist and the backyard barbecue for many working Australian families," Mr Swan said.
The Howard Government has consistently argued that interest rates remain low compared with the 17 per cent peak during the Keating government years.
It says individual wealth has increased significantly in the past decade and there are more women in the workforce who help ease mortgage payments. .
A spokesman for Treasurer Peter Costello said the level of household mortgage repayments had declined as a proportion of wealth.
But Labor claims that soaring housing prices plus interest rate rises make it harder than ever to meet repayments.
"The proportion of family income being lost to mortgage interest repayments is 50 per cent higher now than it ever was under Paul Keating, according to RBA data," Mr Swan said.
"Mr Howard continues to claim that interest rates are low.
"But he has simply lost touch with the new interest rate reality (that) high debt levels mean each interest rate rise swallows more household income than ever before."
Labor's calculations were based on a household paying 30 per cent of income to service mortgage repayments.
Monthly mortgage repayments were calculated on the basis of a 25-year loan equal to 90 per cent of the median house price.
