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How much of your income you really need to pay off a mortgage in Australia

Housing affordability is at the best level in a decade as a result of the coronavirus recession.

An Australian dual-income couple earning $1,305 a week after tax needed to dedicate 23 per cent of their monthly income to pay off a mortgage in September, down from 25.1 per cent a year earlier, an analysis by ratings agency Moody's showed.

This was also well below the decade-average level of 26.4 per cent, covering the aftermath of the Global Financial Crisis to now.

Housing affordability (Adelaide house pictured) is at the best level in a decade as a result of the coronavirus recession. In September, an Australian dual-income couple earning $1,305 a week after tax needed to dedicate 23 per cent of their monthly income to pay off a mortgage, down from 25.1 per cent a year earlier, an analysis by ratings agency Moody's showed

Buying a house or an apartment has become easier in every state capital city during the past year and was only expected to get better, with interest rates at a record-low of 0.25 per cent.

How much pay a couple needs to service a loan

SYDNEY: 29.9 per cent, down from 30.9 per cent a year earlier

MELBOURNE: 24.6 per cent, down from 27 per cent a year earlier

BRISBANE: 18.7 per cent, down from 21 per cent a year earlier

ADELAIDE: 19 per cent, down from 19.8 per cent a year earlier 

PERTH: 15 per cent, down from 17.4 per cent a year earlier

Source: Moody's Investors Service data for September 2020 on how much of their pay two-income couples need to spend to service a mortgage. Moody's didn't have data for Canberra, Hobart or Darwin

'Australian housing affordability, which improved over the year to September, will continue to improve slightly over the next 12 months, because of low mortgage interest rates and lower housing prices,' Moody's said.

'For all capital cities, housing was the most affordable or near the most affordable in a decade in September.' 

Couples can now typically pay off a mortgage with less than a fifth of their income in Brisbane, Adelaide and Perth. 

Melbourne home loans can be serviced with less than a quarter of take-home pay but Sydney remains a challenge, with mortgages still consuming close to a third of salary levels. 

Australia's biggest cities are still among the least affordable in the world, when incomes were compared with house prices.

Before the coronavirus pandemic, Sydney and Melbourne in January 2020 ranked just behind Hong Kong and Vancouver in American think tank Demographia's list of the world's priciest property markets. 

Adelaide, Brisbane and Perth were considered among the 20 least affordable housing markets in the world, ahead of even New York and Singapore. 

Sydney 

Sydney continues to be Australia's most expensive property market but median house prices have fallen for five consecutive months to $983,262, putting it below the psychological $1million mark for two months running, CoreLogic data showed.

Couples typically earning $1,330 a week needed to set aside 29.9 per cent of of their income to pay off a new home loan, down from 30.9 per cent a year earlier and below the decade-average of 32.7 per cent.

Sydney continues to be Australia's most expensive property market with mortgage repayments typically consuming 29.9 per cent of a dual income. Pictured is a Toongabbie house on the market for $850,000

Melbourne has been Australia's worst-affected property market,. Paying off a mortgage now takes 24.6 per cent of income. Pictured is a house for sale in Altona from $870,000

Melbourne 

Melbourne has been Australia's worst-affected real estate market during the COVID-19 pandemic, with mid-point house prices dropping in September for the sixth month in a row to $780,836.

A working couple on an average weekly, combined income of $1,296 last month needed to spend 24.6 per cent of their income to service their mortgage, a big drop from 27 per cent a year earlier and below the ten-year average of 27.8 per cent.

Perth

Perth has cemented its place as the cheapest state capital city to buy a home with a median house price of $463,634.

A couple typically earning a higher, average weekly income of $1,409, as a result of mining jobs, only needed to dedicate 15 per cent of their pay to servicing a mortgage.

Perth has cemented its place as the cheapest state capital city to buy a home with repayments taking up just 15 per cent of income. Pictured is a house on the market at Innaloo

This was the best affordability in a decade and represented a fall from 17.4 per cent a year earlier.

Brisbane

Brisbane, Australia's third biggest city, also has the best affordability in a decade.

With a median house price of $559,646, a couple typically earning $1,256 a week needed to set aside 18.7 per cent of their income to pay off a home loan, down from 21 per cent a year earlier.

Brisbane prices have mainly remained stable throughout the coronavirus crisis.

Adelaide

Adelaide is Australia's third most expensive city for home borrowers, in a city with more than one million people.

A couple on a combined weekly income of $1,152 needed to spend 19 per cent of their pay dealing with a mortgage, down from 19.8 per cent a year earlier and below the ten-year average of 21.6 per cent.

Brisbane, Australia's third biggest city, also has the best affordability in a decade, with repayments taking up 18.7 per cent of income. Pictured is a house in Stafford selling for $500,000

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