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Aussie home buyers’ budgets slashed by $300,000 in six months, new research reveals

It took just six months for home buyers’ budgets to be slashed by as much as $300,000 according to recent research, and things could get worse before they get better.

Despite falling home values across the country, largely brought on by inflation and increasing interest rates, the dip in asking prices has not matched the fall in borrowing power.

As a result, many purchasers are still struggling to score their dream home even in a market downturn.

Data modelling by Canstar has shown a couple on a gross annual income of $184,000 (two average Australian salaries of $92,000) have lost $289,000 in borrowing power since April this year.

Couples on $138,000 (one and a half average incomes) now have $212,000 less in their buying budget, while singles on $92,000 have seen their borrowing reduced by $125,000.

The figures are based on ABS Average Weekly Earnings, a loan of $500,000 at a current rate of 5.48 per cent and an 80 per cent loan-to-value ratio.

Canstar’s numbers also revealed an individual’s gross annual income required to service a home loan for a median national house price of $818,574 in April would have been $103,500. Today that income would jump to $124,900 for the current $791,896 house price median. But the March 2023 prediction suggests a yearly salary of $131,200 would be needed to buy a house with a slightly reduced median of $763,655.

The research also showed in April, when Sydney’s median house price was $1.416 million, to have sufficient borrowing power a homebuyer’s gross annual salary would need to be $170,600, and now with a $1.283m median it would require earnings of $199,100.

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