When the house next door sold for $1.3 million and the place across the road went for a similar price, Michael Pace began to worry.

The young primary school teacher has rented in Strathmore for years, and hopes to buy a house and settle down with his partner in Melbourne’s north-west. But after lots of penny pinching and scouting local auctions, Mr Pace doesn’t feel much closer to home ownership.

“We’ve been saving and putting money together for a fair few years,” the Meadow Heights Primary teacher said. “It seems like one of those things where there’s no light at the end of the tunnel.”

And Mr Pace is not alone. The education union is concerned new teachers are struggling to secure housing near schools in metropolitan areas.

As families vie to live in popular school catchment zones with strict enrolment limits, the resulting upward pressure on prices can make it difficult for young teachers to find affordable housing in the area.

Young teachers on contracts are finding it hard to settle down. Photo: Quentin Jones Young teachers on contracts are finding it hard to settle down.

The vice president of the Victorian branch of the Australian Education Union, Justin Mullaly, said breaking into both the rental and property market were significant challenges for recent graduates, particularly in the inner city.

The challenge is further amplified for teachers on contracts, which accounts for between 50 and 70 per cent of new teachers in Victoria, according to the union.

Mr Mullaly said contracts often go on year after year, making it difficult for young educators to secure car loans, let alone home loans.

“You can’t establish with a financial institution that you’ve got any capacity beyond the term of your contract to pay it off, which is further delaying the challenge [of buying a house],” he said.

And when a contract is not renewed teachers can be forced to move, in some cases far away from their previous school, to secure another contract position, deterring them from buying property.

Job insecurity, coupled with long hours and a high-pressure work environment, contribute to a very low retention rate, with at least 30 per cent of teachers leaving the job in the first five years.

In the United States, some high school teachers have been priced out of communities, with one report claiming teachers could not afford to buy in roughly 40 per cent of metropolitan areas.

The median house price in Melbourne has risen above $840,000. Photo: Carla Gottgens The median house price in Melbourne has risen above $840,000.

Earlier this year, Treasurer Scott Morrison said 58,000 teachers were among the 1.3 million taxpayers across the country negatively gearing their investments. But teaching graduates entering the workforce in urban areas say they are struggling to pull together a house deposit.

With the median house price in Melbourne rising above $840,000, they have joined the growing number of workers facing at least five years of scrimping and saving to secure a home loan.

“To save the deposit, if someone is entering the profession in their mid-twenties, we’re talking a good five to ten years of saving to even get close to a deposit,” Mr Mullaly said.

He said teachers were looking down the barrel of taking their mortgages well into retirement.

Mr Pace has had to forgo his dream of buying a freestanding house, and is now looking for three-bedroom terraces and townhouses in middle-ring suburbs like Glenroy and Broadmeadows.

“It’s just a hard slog really,” he said. “Unless you’re really prepared to sacrifice the things you want, you really have to put everything in to saving if you want to be able to buy your own house.”