Australian house prices: Where you can still buy affordable beach houses on an average income

During summer, there’s nothing better than being by the beach for a morning swim or an afternoon stroll. A sea breeze on a sweltering day is certainly better than being inland when temperatures soar above 30C.

Despite the post-COVID price surge, average earners priced out of capital city beach suburbs can still find homes with backyards in regional areas — provided they can work from home.

But if they want to live near Sydney or in south-east Queensland, the catch is mortgage stress, leaving borrowers struggling to cover their other bills after meeting their loan repayments.

The affordable options with a moderate climate are typically more than two hours’ drive from a capital city, which is well beyond a reasonable commute even for one or two days a week as a hybrid worker.

“You’ll probably find the more accessible markets, where price points are a little bit lower, tend to be a little bit more further afield possibly outside of what you might describe as a reasonable commuting time,” Cotality’s head of research for the Asia-Pacific Tim Lawless told The Nightly.

“They’re less expensive for a reason probably because they don’t have the same demand-side fundamentals.

“A lot of those markets might be more attractive to people who can work from home without having to go through a hybrid commute or potentially to those that might be entering the more mature stages of their career; so, they’re approaching retirement or moving into retirement.”

Someone earning the average, full-time salary of $104,520 can still buy a house near the beach with a 20 per cent deposit. At the maximum borrowing capacity, this individual can get a loan of $627,120 to buy a $783,900 home — and would have a debt-to-income ratio of six.

The banking regulator, however, is cracking down on lenders who approve onerous loans, given someone borrowing at their maximum capacity would be spending more than 40 per cent of their pre-tax income on monthly repayments.

From February 1, banks will be required to ensure that loans, where someone owes the bank six times or more of what they earn, don’t make up more than 20 per cent of their loan book under new Australian Prudential Regulation Authority rules.

That means the typical borrower will be restricted to a more realistic debt-to-income capacity of five. That would get a $522,600 mortgage to buy a $653,250 home.

Nambucca Heads on the NSW mid-north coast is a four-hour drive from Brisbane and almost six hours from Sydney.

But its median house price of $684,804 makes it a possibility for the average-income earner who can borrow a bit more than five times their pay.

For those wanting to be closer to a capital city market Mandurah, an hour’s drive south of Perth, has an affordable mid-point house price of $631,460.

Wonthaggi, a two-hour drive south-east of Melbourne, has an affordable price of $554,653.

Warrnambool, a three-hour drive west of Melbourne, has an attainable mid-point price of $639,953.

Mackay in north Queensland, an 11-hour drive north of Brisbane, is still affordable at $500,314. It’s a similar story in Geraldton, a four-hour drive north of Perth, where $508,243 is the median.

Those wanting to borrow six times their salary would have a better chance if they had a bigger home deposit from selling another property.

“Once you get a little bit closer to the major amenities and the bigger cities with coastal markets, the barriers to entry are much higher,” Mr Lawless said.

“They might be more appealing to those that have built up some equity through previous home ownership. They’ve got a large deposit.”

Beachside suburbs within a two-hour drive from Sydney or Brisbane typically have prices in the seven figures.

But a short drive from the beach, it’s possible to get something at Lemon Tree Passage near Port Stephens, where $725,176 is the mid-point. This area is a two-hour drive north of Sydney.

A little further north Tuncurry, next to Forster a three-hour drive north of Sydney, has a mid-point price of $773,936 and is right near the beach.

Hervey Bay, three-hours north of Brisbane, has a mid-point house price of $730,567 in the suburb of Pialba.

At Victor Harbor, an hour’s drive south of Adelaide, it’s $754,659.

During the past year, regional house prices have grown by 8.7 per cent to $738,230. This was stronger than the 7.9 per cent annual increase in capital city house prices, that saw values edge up to $1.1 million.

First-homebuyers are able to get a loan with a 5 per cent deposit, regardless of income, but home price caps apply depending on area.

For regional homes, the cap is $800,000 in NSW, compared with $650,000 in Victoria, $700,000 in Queensland, $600,000 in WA, while SA’s regional cap is $500,000.