The Real Estate Institute of Australia’s (REIA’s) latest Housing Affordability Report was released last week revealing housing affordability worsened across Australia. As expected, NSW and Victoria remain the least affordable places to buy property with an astonishing 55 percent of a family’s income devoted to meeting the average loan repayment in NSW. In Victoria, 46.5 percent of their hard-earned goes to meeting mortgage commitments. The national average is now 44.9 percent, well above mortgage-stress territory. We are fast approaching record levels of housing un-affordability.
Happily, Western Australia remains astonishingly affordable with 34.5 percent of our average weekly family income of $2,471 covering the average loan of $478,236. In contrast, mortgage holders in NSW hold average loans of $731,410 with an average family income of $2,373.
As expected, housing affordability has deteriorated over time declining 14.2 percent over twenty years with much of that decline (11.6 percent) occurring in the past five years. Tasmania’s decline in affordability tops the chart with a 21.7 percent fall in affordability over twenty years. Once more, WA’s affordability performance remains appealing to home buyers and investors with a modest 7.4 percent deterioration in affordability in twenty years.
Rental affordability is a hot-button topic both politically and in the media. With the average tenant across Australia paying 23 percent of their income on rent, leasing remains significantly more affordable than property ownership. Over the past twenty years, home ownership affordability has deteriorated at a rate almost 18 times faster than rental affordability.
Whilst property ownership affordability has rapidly declined over the past five years, national rental affordability has been remarkably stable, worsening by a mere 0.8 percent in twenty years. Rental affordability has, in fact, improved over the past five years by 0.7 percent. Ten years ago, it was less affordable to rent a home in Australia than it is today.
In WA, rental affordability has deteriorated by 3.9 percent in five years, but barely changed across the fifteen years prior to 2018.
Whilst rental affordability is stable, median rents continue to climb with lack of housing supply the main contributor to the increases. A potent combination of low investor activity, rising interest rates, stamp duties, land taxes, insufficient social housing, tenant-friendly tenancy laws, increasing population, construction industry blockages and short-stay accommodation continue to conspire against maintaining a reasonable supply of rental homes.
REIA’s figures show that rental affordability across Australia has barely changed over the past twenty years, proving that markets are cyclical. Whilst we know things are tough for tenants right now, once we get more supply into the market, balance will return.
The National Hotel and St. Patrick’s Community Support Centre hold their annual long table dinner event each November to raise much-need funds to assist those without a place to call home. This year’s was a cracker and a shout-out to Karl and Janine Bullers for their inspiration. You see evidence … Read more
The media and government have thrown about the phrase ‘housing crisis’ in recent times to highlight the challenges of Australia’s housing market. The overuse of a slogan can reduce the seriousness of the challenge of housing affordability. Last week, the federal government finally got legislation through the parliament designed to … Read more