Affordability in Australia declines due to record high prices
Housing affordability in Australia continued to decline in the second quarter of 2017 this year as prices reached record highs, the latest index shows.
It comes as a time when the Australian Government has announced it will do more to ease the situation by making more help available to first time buyers and by adding to restriction on overseas buyers.
The second quarter affordability index from the Housing Industry Association (HIA) says that buying a home is becoming less affordable largely due to a rise in the median dwelling price of 9.1% to a record high of $540,200.
It points out that the growth in house prices in the second quarter outstripped the growth in wages resulting in the deterioration in affordability and overall the index is down by 0.3%.
New South Wales was the most significant negative influence with affordability in Sydney now down 0.7% and the rest of the State down by 2.2%.
‘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,’ it says.
Affordability Melbourne improved marginally in the second quarter but remains 6% less affordable than this time last year but affordability has improved in six of the eight capital cities.
The largest improvement was in Darwin, up 4.3%, followed by Adelaide up 2.9%, Hobart up 1.6%, Brisbane up 1% and Canberra and Melbourne both up 0.8%. But as well as Sydney falling 0.7%, Perth affordability was down by 1.3%.
‘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,’ the report adds.