Home affordability still an issue in Australia despite more housing being built
There has been a steady improvement in housing affordability in Australia during the opening months of 2017, mostly due to a fall home prices in March.
However, home affordability continues to be a major challenge, according to the Housing Industry Association (HIA) and it is urging the Government to ensure more homes are built alongside a reduction in the barriers to home ownership.
The latest HIA affordability index shows that in the first quarter of the year it improved by 1.9% and is 1.2% better than this time last year. ‘The right approach to tackling affordability is through continuing to secure the delivery of an appropriate supply of new homes and to reduce the barriers and costs involved in doing this,’ said HIA senior economist Shane Garrett.
A breakdown of the figures show that the largest improvement in housing affordability during the first three months of the year was in Perth with an improvement of 5.6%, followed by Hobart up 5.3% and Sydney up 5%. Smaller gains in affordability were seen in Brisbane with an improvement of 0.6% and a rise of 0.4% in Melbourne.
Of the capital cities where affordability declined, the biggest fall was in Canberra, down 7.2% while Adelaide was down 4% and Darwin down 0.1%.
The index also shows that conditions are most challenging in Sydney, which has the lowest score of 57.5, followed by Melbourne at 70.7 and Canberra 78.5. The fourth most difficult capital city for affordability is Brisbane at 86.8 Darwin at 89.5, Adelaide 90.5, Perth at 99.5 and Hobart the most affordable capital city at 113.9.
More new homes are being built and the most up to date figures from the Australian Bureau of Statistics (ABS) show that starts hit an all-time high in the March quarter of 2016, eased back from the peak during the middle part of the year and then improved slightly in the final quarter.
Overall the In aggregate, the total number of commencements increased by 0.3% in the fourth quarter of 2016 and were 0.8% up on a year earlier but the number of new detached homes being built fell by 3.4% while apartments increased by 4.4%.
‘While the strong level of activity at a national level continues to paints a rosy picture for the state of play in the sector, the disparities between states continue to play out,’ said HIA Economist, Geordan Murray .
Amongst the larger states, Victoria and South Australia were the only two states to post an increase in commencements during the December 2016 quarter, up by 7.6% and 2.8% respectively.
Commencements in both the ACT and the Northern Territory rebounded strongly after recording particularly soft results in the previous quarter with a jump in multi-unit commencements lifting the ACT total to 2,122 which is the strongest quarter on record.
In contrast, the bounce in the Northern Territory was primarily attributable to stronger detached dwelling commencements and the result was amongst the NT’s strongest quarters over the last 15 years for detached house starts.
Elsewhere, commencements fell by 0.2% during the quarter in New South Wales, by 5.3% in Tasmania and by 8% in Western Australia. The weakest result was recorded in Queensland where a substantial decline in multi-unit commencements contributed to an overall decline in starts of 19.3% during the quarter.