According to a new report from the Housing Industry Association (HIA), the Australian housing market appears to have reached its most affordable level for more than five years, despite a rebound in prices. last months.
The HIA Financial Affordability Index increased 2.2% in the September quarter, reflecting 80.8 for capitals and 94.8 for regions. Financial accessibility measures have improved across the country, in all eight capitals.
"This means that in Australian capitals, just over 1.2 income will be easily able to repay an average mortgage, and in the regions, it takes little more than a single income," said the chief economist of the HIA, Tim Reardon.
Read also: The subsidence of land values ​​could improve affordability
The most significant improvement in affordability occurred in Western Australia, which was already the cheapest market. Perth's affordability index rose 15.3% to 126.3 points. This means that it takes less than 0.8 income in Perth to handle an average mortgage.
Despite substantial price appreciation in Sydney and Melbourne, their readings for affordability improved at a considerable pace.
"Interest rate cuts have more than offset the rise in home prices to ensure continued improvement in the affordability of housing," said Reardon.
He stated that the reduction in interest rates, even though it was not fully passed on to the major lenders, has increased the ability of households to manage home loans.
"All of these factors were combined in favor of first-time home buyers, which allowed this cohort to account for almost one-third of new home loans – a record," said Reardon.
Read also: Sydney and Melbourne on the rebound?
While the modest increase in wages has also helped to increase affordability, he added that sustainable improvements should come from wage growth, especially if the RBA were to run out of "rate ammo" of traditional interest ".
As interest rate reduction opportunities are still limited, the improvement in affordability will also require the establishment of favorable economic conditions, underpinned by the parameters defined by the state governments and by the federal government.
"Up to 50% of the cost of a house and a housing complex can be made up of paperwork and taxes.Reduce the housing tax and ensure a number Sufficient housing is an ongoing challenge for governments, "Reardon said.
Efforts like these could be crucial, as real estate prices are likely to continue to rise. In fact, the latest CoreLogic home value index showed another month of housing value growth in October, with Sydney reporting an increase of 1.7% and Melbourne posting a gain of 2.3%.
The continued growth in housing values ​​can be attributed to a wide range of factors, said HSBC Chief Economist Paul Bloxham.
"Rate reduction and prudential laxity have arrived in a market whose supply is very limited and that is why we are seeing such a rapid rise in real estate prices," he said. he told The Australian Financial Review.
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