Desperate move Aussie couples on $500,000-a-year are being forced to make as interest rates bite even the highest rung of society
- High income earners struggle with mortgages
- Some having to move back with parents
- READ MORE: Barefoot Investor makes interest rates call
Higher interest rates and cost of living pressures are forcing mortgage holders earning half a million dollars to consider moving back in with their parents.
Shore Financial CEO Theo Chambers said even young couples with combined household incomes of $400,000 to $500,000 were struggling to afford their $2million-plus mortgage in areas of Sydney particularly if they had kids in childcare.
'There's a lot of people moving back in with family so they can get rid of childcare fees, rent out their property, they're not selling,' Mr Chambers told the Sydney Morning Herald.
'They can see in a few years, once their kids go to school, things will be easier. While their kids are still at daycare, it's so expensive for them to still be working.'
He said high-income couples had bought when interest rates were at two per cent - a figure that now seems a distant memory - and would have thought 'we can easily afford a $3million house in Bondi'.
However, since they have had children and they do not qualify for childcare subsidies, they need to fork out $7,000 a month in fees.
Without being able to refinance their mortgages they have cut out discretionary spending and holidays and cut back to only one car.
Mr Chambers said people like this feel 'stuck' and that even though they had done all the 'right things' and 'ticked every box' they were still struggling.
Higher interest rates and cost of living pressures are forcing couples earning half a million dollars to consider moving back in with their parents (stock image)
Mortgage Choice Dee Why principal James Algar said she was dealing with high earners who had cleaned out their savings to keep their mortgage going.
She said while most of these people were not in true financial dire straits or contemplating selling they are feeling the pinch.
So far she said only a few are downsizing to reduce the mortgage or moving.
Others are being forced to cut children's recreational activities or other spending.
Demographer Simon Kuestenmacher said housing affordability was determined by the ratio of house prices to incomes.
'Not even the rich can comfortably afford a home. It's not the most tragic thing … [But] the situation for people in the middle is absolutely dire,' he said.
Mr Kuestenmacher said this caused young people to be alienated because they look at the economic system and say it 'isn't working for me'.
According to a 2024 Demographia report, Sydney, Melbourne and Adelaide are among the 10 most unaffordable cities in the world, with Hong Kong topping the list.
Shore Financial CEO Theo Chambers said even young couples with combined household incomes of $400,000 to $500,000 were struggling to afford their $2million-plus mortgage (stock image)
The median cost of a house has doubled in Australia in the space of only 13 years, from under $500,000 in 2011 to nearly $1million in 2024.
An ANZ Corelogic Housing Affordability Report has showed that house prices in Sydney now cost 10 times the median salary.
In July, research led by property experts Mustapha Bangura and Professor Chyi Lin Lee found the average full-time income was no longer good enough to enter the housing market anywhere in Sydney.
The pair found nowhere in Sydney was affordable based on the 2021 NSW weekly median income for part-time employees of $600 - as well as the weekly median income for full-time employees of $1,500.
Proximity to the city was found to be a factor in the study, with it more challenging for prospective homebuyers the closer the property is to Sydney's CBD.
Interest rates were kept at a 12-year-high of 4.35 per cent at the latest meeting by the Reserve Bank of Australia at the start of December.
The cash rate is now higher than the equivalent policy rates in New Zealand and Canada as other first-world nations get relief.
Governor Michele Bullock gave a strong hint rate cuts could be months away with inflation still too high, ahead of an election next year.
