Housing affordability continues to fall

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Housing affordability continues to fall

StartFragmentHousing affordability in Australia continued its descent in the June quarter this year, according to the Housing Industry Association’s (HIA) latest affordability index. The report stated the continued decline was largely due to a rise in the median dwelling price of 9.1% to a record high of $540,200. The HIA Affordability Index uses a range of data including wages, house prices and borrowing costs to provide an indication of the affordability of housing. A higher index result signifies a more favourable affordability outcome. “The growth in house prices in the quarter outstripped the growth in wages resulting in the deterioration in affordability,” the report stated.EndFragment

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Housing affordability continues to fall

StartFragment“As a consequence of these factors the Affordability index for Australia dropped by 0.3% in the June 2017 quarter. The report found NSW was the most significant negative influence on this result and affordability in Sydney had now fallen past a critical level (Sydney, - 0.7% and the rest of NSW, - 2.2 per cent). “Acquiring and servicing a mortgage on a house in Sydney now requires more than two standard Sydney incomes. Sydney is the only market to have achieved this outcome in the 15 year history of this report. “Affordability in Melbourne improved marginally in the quarter but remains 6.0% less affordable than this time last year.” On a positive note, affordability was up in six of the eight capitals over the Juny 2017 quarter. The largest improvement occurred in Darwin (+4.3%), followed by Adelaide (+2.9%), Hobart (+1.6%), Brisbane (+1.0%), Canberra (+0.8%) and Melbourne (+0.8%). Of the cities where affordability worsened, Perth saw the biggest deterioration (-1.3%) and Sydney (-0.7%). “The Perth deterioration in affordability appears to contradict the soft conditions in that market but the fall in average wages in Perth in the quarter outweighed the positive impact on affordability from the falls in home prices,” according to the report.EndFragment

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