Sydney property more affordable than 26 years ago, says study

By Mozo ·

While the debate over Sydney’s soaring property prices continues, new research shows that the housing market is more affordable than it was 26 years ago.

According to the latest data from BIS Shrapnel, homebuyers in 1989 had to use almost half of their income to pay off their mortgage as opposed 35.9% now.

One of the reasons for this is also that even with higher prices, because of the record low interest rates, a smaller proportion of the homeowners’ incomes goes towards mortgage.

"The interest rate was 17% at that time. It spiked so high, the whole country went into recession," BIS Shrapnel's senior manager of residential, Angie Zigomanis, said.

But experts also warn that a rise in interest rates can lead to a sudden change in the affordability trend.

The best time to be paying off a mortgage was 1997, when just 24% of a homebuyer's income was needed to pay off a home loan, but then came the boom, reported Domain.com.au.

"In the early 2000s, Sydney went through a massive boom, arguably a stronger boom than now," Mr Zigomanis said.

Just last week, RBA Governor Gelnn Stevens said that Sydney’s rising property prices were “acutely concerning.”

Currently, the biggest challenge for first-home buyers is not actually repayments, but higher asking prices requiring hefty deposits.

Home loan comparisons on Mozo - last updated January 16, 2021

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.

I want to borrow

years

  • 1.99% p.a.variable for 12 months and then 2.48% p.a. variable

    2.47% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.34% p.a. variable

    2.34% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.19% p.a. variable

    2.19% p.a.

      Compare
    Details
  • 2.04% p.a.
    fixed 2 years

    2.79% p.a.

      Compare
    Details
  • 2.09% p.a.
    fixed 2 years

    2.56% p.a.

      Compare
    Details
placeholder

Talk to a Mozo home loans expert

Buying your first home, refinancing your existing home or thinking of investing? Speak to Steve, our home loans expert today!

^See information about the Mozo Experts Choice Home Loans Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.