Housing affordability barely improves as property prices fall

That is the highest level since June 2011 and up from 40.4 percent in the previous quarter.

Not much better for the nation’s renters, as affordability worsened for the typical renter, who spent 30.9 percent of income on rent in the June quarter, down from 30.3 percent in the quarter. previous.

Rent was even less affordable in regional Australia, with renters spending 34% of their income on a new lease compared to 28.4% spent by city renters.

Home values ​​remain high relative to income, though starting to fall. In capital cities, median home value is 8.3 times median family income, down from the previous quarter’s record 8.4 times.

It would take house price falls of more than 25 per cent to come close to seeing a broad improvement in many of these measures of housing affordability, an unlikely scenario, according to Felicity Emmett, senior economist at ANZ.

“Although we might see a marginal improvement in some of these measures, the underlying issues around housing affordability will not be fixed by a 15 percent or so correction in national house prices, not from the perspective of mortgage serviceability, Emmet said.

Rent affordability is getting worse.

Rent affordability is getting worse.Credit:pedro rae

“It would need a decline of more than 25 percent to offset the impact of higher interest rates on mortgage serviceability.”

But homeowners with deep savings and high family incomes looking to buy homes in coastal and lifestyle regions may be the biggest beneficiaries of the recession, as years of the deposit hurdle have already been removed in some of the deepest pockets. affluent Sydney and Melbourne.

For example, in Sydney, it would now take 2.5 fewer years to save for a deposit in the Manly and Pittwater statistical regions, as home values ​​fell by $264,013 and $204,484, respectively, in the June quarter.


In Melbourne, it now takes 1.6 fewer years to save for a deposit in the Darebin South Statistical Region, 1.1 fewer years in Bayside and 0.9 fewer years in Boroondara.

Emmett said the 15 percent drop forecast could be a marked improvement in the deposit hurdle for some.

“In some of the coastal lifestyle regions, we’re seeing a pretty significant improvement in reservoir hurdle,” he said.

“But when we look at the measures together, we’re not likely to see a material improvement in housing affordability, even with a decline in home prices.”

CoreLogic’s head of Australian research, Eliza Owen, said that while there was a trade-off between falling property prices and rising interest rates, some home seekers on the verge of buying could benefit.

Buyers in some rich pockets may benefit from price declines.

Buyers in some rich pockets may benefit from price declines.Credit:Stephen McKenzie

“There is a trade-off in places where the deposit hurdle has been lowered against higher mortgage costs and higher rents. If you had savings levels of 20 percent before prices started to drop, it could mean you have more deposits,” Owen said.

“The real trap is for low-income renters who are faced with higher rents, and find it especially difficult to save for the deposit.”


He said affordability for first-time homebuyers may improve as the recession continues, but that depends on household savings and income.

Owen said the rapidly narrowing affordability gap between regional cities and capital cities means households looking for affordable housing may have run out of time.

“It takes only five months less for regional Australians to collect their deposit. The benefits of moving to the regions in terms of affordability are likely to have eroded in the last couple of years.”

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