Do Kiwis who moved to Australia regret it? Comparing housing affordability in New Zealand and Australia

An article recently published in mainstream media comparing living costs in Australia and New Zealand has sparked widespread debate. The latest survey data shows that growing numbers of New Zealanders are choosing to leave, attracted by Australia’s higher salaries, more affordable living costs and better working conditions. More than 85,000 New Zealanders have now chosen to move to Australia, further intensifying New Zealand’s ‘brain drain’ in recent years.

The survey shows that house prices in Australia are slightly lower than in New Zealand, although Sydney rents are higher. Spending on utilities and services, including electricity, water, waste disposal, wastewater treatment, gas, transport and communications, as well as groceries, is also more affordable in Australia. Average annual earnings are also considerably higher than in New Zealand, particularly attracting professionals such as police officers and nurses. Although living costs in Australia are rising too, its job market remains strong.

So, for Kiwis deciding to move across the Tasman, is buying a home in Australia easier too? A newly released house price analysis reveals which Australian and New Zealand cities offer more affordable housing.

Darwin: the only city across Australia and New Zealand where homes are comfortably affordable

 

Comparison of household incomes and the income needed to afford a home in major Australian and New Zealand cities (Source: NZ Herald)

 

Of all the major cities in Australia and New Zealand, Darwin is the only one where local households can comfortably afford a new home. More surprisingly, Melbourne’s house prices are also more affordable than those in any major New Zealand city.

The latest house price analysis shows that Darwin households generally have higher incomes and relatively low house prices. For example, a Darwin household needs an annual income of just NZ$109,000 to comfortably buy a median-priced home, while the city’s median household income is as high as NZ$140,000, some NZ$30,000 above the income needed to buy. The analysis found that Darwin’s median house price in the second quarter of 2024 was NZ$551,000. Homeowners needed to pay approximately NZ$32,000 in mortgage repayments, representing just 23% of annual income, well below the generally recommended mortgage spending ratio of 30%.

 

Auckland: buyers need a substantial income boost to get on the property ladder

By contrast, Auckland homebuyers face considerable pressure on their incomes. The data shows that Auckland households need to earn NZ$219,000 a year to keep mortgage repayments within 30% of their income, while the city’s current median household income is NZ$134,000. As the chart above shows, Darwin is the only city where buyers’ incomes exceed the amount needed to buy a home. In other cities, such as Sydney, buyers need an annual income of NZ$253,000, far above Sydney’s median household income of NZ$132,000.

Comparison of house prices and affordability in major Australian and New Zealand cities (Source: NZ Herald)

Compared with Sydney and Auckland, Melbourne is a more attractive city for New Zealanders. Its median house price is NZ$850,000, and buyers need an annual income of NZ$168,000. Although Melbourne buyers need to spend 42% of their annual income on mortgage repayments, it still appears more affordable than New Zealand’s major cities. CoreLogic analyst Nick Goodall noted that although Darwin’s affordability appeals to New Zealanders, its tropical climate, remote location and smaller size may not suit everyone. Darwin’s high incomes largely come from mining, which also explains why its median household income is far above those of other cities.

 

The housing affordability gap between New Zealand and Australia

The analysis, based on CoreLogic data and typical interest rates in Australia and New Zealand, reveals a significant housing affordability gap between the countries. The data shows that Sydney is the least affordable city across the two countries, while Darwin performs best on the relationship between house prices and incomes. For example, Sydney’s median house price reached NZ$1,277,000 in the second quarter of this year, with buyers needing to pay NZ$76,000 in mortgage repayments, accounting for 58% of their income. By comparison, Darwin buyers need to spend just 23% of their income. Although Melbourne’s house prices are relatively high, its diverse employment opportunities and higher incomes mean it remains a popular choice for New Zealanders moving to Australia.

CoreLogic chief economist Kelvin Davidson said buyers generally need incomes far above what they actually earn to buy ‘comfortably’, reflecting current market pressures. He noted that although spending 30% of income on mortgage repayments is ideal, many households take on greater financial pressure to achieve their dream of home ownership. In less affordable cities, such as Tauranga in New Zealand, buyers often already own property and use previously accumulated equity to fund the deposit on their next home, reducing the mortgage burden.

 

 

Comparing buyers’ first-year costs

Comparison of first-year homebuying costs in major Australian and New Zealand cities (Source: NZ Herald)

Alongside house prices and incomes, the analysis also considered buyers’ total spending in the first year of purchasing a home. In Sydney, buyers need to pay approximately NZ$331,000 in the first year, including a deposit of NZ$265,000 and mortgage repayments of NZ$76,000. In Auckland, the total is NZ$270,000.

By comparison, Darwin places the lightest burden on buyers, with total first-year costs of NZ$143,000, far below Sydney and Auckland. Dunedin and Christchurch in New Zealand also have relatively low homebuying costs.

 

Is buying a home in Australia more appealing?

Darwin has a low ratio of homebuying costs to median income, with buyers needing to spend only a quarter of their income on mortgage repayments. House prices in cities such as Canberra, Melbourne and Perth are also more affordable than those in any major New Zealand city.

According to data from CoreLogic, Infometrics and the Australian National University, Sydney is the least affordable city for housing across Australia and New Zealand, followed by Tauranga. Sydney’s median house price reached NZ$1,277,000 in the second quarter of 2024, with buyers needing to pay NZ$76,000 a year in mortgage repayments, accounting for 58% of their income. Melbourne, meanwhile, has become the preferred destination for many New Zealanders moving overseas because of its greater employment opportunities and higher incomes. Melbourne buyers spend 42% of their income on mortgage repayments, considerably less than in Sydney.

Overall, although Australia is more appealing in areas such as house prices, differences in lifestyle, employment opportunities and climate between cities may influence people’s choices. Buyers therefore need to weigh up a range of factors when deciding. What would you choose? Would you favour Darwin for its lower cost of living, or place more value on Melbourne’s diverse employment opportunities? Or would you prefer to stay in New Zealand, despite the pressure of house prices, to remain close to family and friends? Share your views and discuss how to find a balance between your aspirations and reality.