Commsec has released research today arguing that car affordability is the best in 38 years:
The CommSec Car Affordability index has improved to the best levels since 1976. CommSec estimates that someone earning the average wage has to work for 25.9 weeks to purchase a new Ford Falcon XT auto sedan, down from 31.3 weeks just three years ago… a decade ago the worker would have needed to work 37 weeks to make the equivalent purchase.
Via a combination of a strong Australian dollar, rising wages and price competition between car manufacturers, car affordability stands at the best levels in 38 years… Strong competition between global car manufacturers, underpinned by improving production efficiency should also ensure that car prices remain affordable for car buyers…
The massive improvement in car affordability has enticed buyers to move up the price curve and purchase higher- priced vehicles such as luxury cars. This trend has favoured imported car makes in preference to locally-produced vehicles. Even a Porsche Boxster ($112,300) is cheaper than a decade ago while wages are up 53 per cent over that period.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
