What the typical Aussie can really afford - and why you might have to  move to buy that dream home

An Australian worker on a middle income can now only afford to buy an apartment in a big city unless they moved to a regional area.

A generation ago in the mid-1990s, the typical employee could afford a house in Sydney or Melbourne, but high immigration during the past two decades has destroyed the great Australian dream. 

The median - or middle - salary stood at $67,600 in August with this figure covering everyone working full-time or part-time.

Someone on this income with no children buying on their own would only be able to borrow $324,800, a RateCity analysis for Daily Mail Australia showed.

The monthly mortgage repayment of $2,114 is also cheaper than renting, despite the Reserve Bank's 13 interest rate rises in 18 months.

With a 20 per cent mortgage deposit of $81,200, a $324,800 mortgage would buy a $406,000 home, which is enough to buy an inner-city apartment in Melbourne, Perth and Adelaide.

That is less than the median apartment price of $457,296 in Perth - Australia's cheapest state capital city based on CoreLogic data.

But the West Australian capital has choices for those buying a unit on a budget with Victoria Park near the city having a median apartment price of $376,833. 

Sydney's median apartment price is so dear at $836,200 that someone would have to move a long way from the city centre to afford anything at all.

Even Fairfield is a stretch, however, despite being 30km from the city, with a mid-point price of $416,280.

Melbourne offers better value with the broader city's median unit price at $610,490.

The city centre has a median unit price of $473,589 but at Carlton North, the mid-point unit price is $353,375 in a suburb near Lygon Street's Italian restaurants.

That kind of money would buy a one-bedroom unit that, while small, is less than 5km from Melbourne's central business district. 

A median-income earner borrowing $324,800 would be owing their bank $2,114 a month with a 6.78 per cent variable mortgage rate but this is cheaper than the mid-point weekly rent of $556 - working out at $2,462 a month.

An influx of international students since Australian reopened in December 2021 has seen national rental vacancy rates plunge to just 1.1 per cent. 

Brisbane's median unit price of $552,332 is dearer than what middle-income borrowers can affordable unless they moved to Kippa-Ring, 40km north of the city, where $401,199 is the mid point.

Adelaide's median unit price of $479,428 means those on a middle-income can afford something near the city with Kilburn, 8km north of the CBD, having a mid-point price of $396,545.

Those on a middle income wanting to buy a house near the beach would have more choices in a more remote regional area.

Sarina, south of Mackay in north Queensland has a median house price of $394,514 compared with $394,101 at Mareeba in the state's tropical far north.

Portland in Victoria's far west has a mid-point house price of $391,095. 

The Australian Prudential Regulation Authority considers it risky when someone owes the bank more than six times their income and someone earning $67,600 borrowing $324,800 would have a debt-income ratio of 4.8. 

The Reserve Bank's 13 interest rate rises in 18 months has reduced what banks can lend because they are required to assess someone's ability to cope with a three percentage point rise in variable mortgage rates.

But since May 2022, mortgage rates have climbed by 4.25 percentage points, with the RBA cash rate now at a 12-year high of 4.35 per cent. 

High immigration during the past two decades has put houses in Sydney and Melbourne, in particular, beyond the reach of middle-income earners buying on their own. 

In August 1995, Sydney's median house price was $196,750 and a middle-income earner on $26,000 with a 20 per cent deposit of $26,000 had a debt-to-income ratio of 'six'.

Melbourne's equivalent mid-point price was $129,000 which meant someone on a median income had a debt-to-income ratio of 'four'.

In 2023, Sydney's median house price of $1.397million costs 16.5 times a middle income of $67,600 even with a 20 per cent deposit of $279,473 to pay off an unaffordable $1.118million loan.

In Melbourne, the equivalent debt-to-income ratio to buy a $943,725 is 11.7, even with a 20 per cent deposit of $188,725 to borrow $754,980.

But a middle-income earner would not qualify for a home loan anyway with a debt-to-income ratio of 4.8 now the limit following 18 months of rate rises. 

ABC finance expert Alan Kohler said the federal government should have a policy of houses costing four times a typical income but conceded it would mean 18 years of no price growth, something that hasn't occurred since the Great Depression and World War II.