Aussie home loan repayments breach 30% “unaffordable” threshold

By Leith van Onselen

The Adelaide Bank/REIA Housing Affordability Report has been released for the June quarter has been released, which reveals that the percentage of household income required to service the typical Australian mortgage has increased by 0.2 percentage points to 31.4% – breaching the widely accepted threshold to being a manageable housing repayment. But on a positive note, rental affordability has improved.

As expected, mortgages are most expensive in the housing bubble and immigration epicentres of Sydney and Melbourne:

The latest Adelaide Bank/REIA Housing Affordability Report found the proportion of median family income required to meet average loan repayments increased by 0.2 percentage points to 31.4 per cent…’

“Over the quarter, the proportion of median family income required to meet rent payments reduced by 0.6 percentage points to 24.3 per cent…

New South Wales

NSW had the largest percentage increase in loan repayments and continues to be the least affordable state or territory in which to buy a home. The proportion of income required to meet loan repayments increased to 38.0 per cent, an increase of 1.9 percentage points over the quarter and 0.5 percentage points compared with the corresponding quarter 2016. The proportion of income required to meet loan repayments is 6.6 percentage points higher than the nation’s average.

New South Wales recorded an improvement in rental affordability with the proportion of income required to meet median rent payments decreasing to 28.6 per cent, a decrease of 0.4 percentage points over the June quarter and a decrease of 0.3 percentage points compared to the same quarter last year…

Victoria

Victoria showed a decline in housing affordability, with the proportion of income required to meet loan repayments increasing to 33.4 per cent, an increase of 0.9 percentage points over the quarter and an increase of 0.6 percentage points compared to the same quarter of the previous year.

Rental affordability in Victoria has improved over the quarter with the proportion of income required to meet median rents decreasing to 23.1 per cent, a decrease of 0.7 percentage points over the quarter and a decrease of 0.6 percentage points compared to the June quarter 2016…

Queensland

Housing affordability in Queensland declined over the June quarter with the proportion of income required to meet home loan repayments increasing to 27.2 per cent, an increase of 0.5 percentage points over the quarter but a decrease of 0.5 percentage points compared to the same time last year.

Rental affordability in Queensland improved over the quarter with the proportion of the median family income required to meet the median rent decreasing to 23.0 per cent, a decrease of 0.7 percentage points over the quarter and a decrease of 0.6 percentage points compared to the same quarter 2016…

South Australia

South Australia recorded a decline in housing affordability with the proportion of income required to meet monthly loan repayments increasing to 26.8 per cent, an increase of 0.6 percentage points over the quarter but a decrease 0.1 percentage points compared to the June quarter 2016.

Rental affordability in South Australia improved over the quarter with the proportion of income required to meet rent payments decreasing to 21.9 per cent, a decrease of 0.7 percentage points over the quarter and a decrease of 0.1 percentage points compared to the June quarter 2016…

Western Australia

Western Australia saw a decline in housing affordability over the quarter with the proportion of income required to meet loan repayments increasing to 23.6 per cent, an increase of 0.2 percentage points over the quarter but a decrease of 0.3 percentage points compared to the June quarter 2016.

Rental affordability in Western Australia increased during the June quarter with the proportion of family income required to meet the median rent decreasing to 18.1 per cent, a decrease of 0.5 percentage points over the quarter and a decrease of 1.6 percentage points compared to the year before…

Tasmania

Housing affordability in Tasmania declined with the proportion of income required to meet home loan repayments increasing to 23.9 per cent, an increase of 0.3 percentage points over the quarter and an increase of 0.2 percentage points from the June quarter 2016.

Rental affordability in Tasmania improved with the proportion of income required to meet median rents decreasing to 25.8 per cent, a decrease of 0.8 percentage points over the quarter but an increase of 0.8 percentage from the same quarter 2016…

Northern Territory

Housing affordability in the Northern Territory improved with the proportion of income required to meet loan repayments decreasing to 20.3 per cent in the June quarter, a decrease of 0.8 percentage points over the quarter and a decrease of 1.8 percentage points when compared to the June quarter 2016.

Rental affordability in the Northern Territory also improved with the proportion of income required to meet the median rent decreasing to 23.1 per cent, a decrease of 0.6 percentage points over the quarter and a decrease of 2.0 percentage points compared to the June quarter 2016…

Australian Capital Territory

Housing affordability in the Australian Capital Territory improved with the proportion of income required to meet home loan repayments decreasing to 19.8 per cent, a decrease of 0.3 percentage points over the quarter and a decrease of 0.7 percentage points compared to the same quarter last year.

Rental affordability remained stable over the June quarter with the proportion of income required to meet the median rent remaining at 17.9 per cent and with a marginal increase of 0.1 percentage points compared to the June quarter 2016.

These results should come as no surprise. The latest CoreLogic Mapping the Market report showed that suburbs with a median price below $600,000 (Sydney) or $400,000 (Melbourne) have vanished over the past five years, whereas there has been much less shrinkage in affordability elsewhere:

Sydney houses

In June 2012, 21.3% of Sydney suburbs had a median house value of more than $1 million, by June 2017 55.7% of suburbs had a median house value in excess of $1 million while only 8.7% of suburbs had a median value below $600,000 and most were located more than 50 kilometres from the CBD.

Melbourne houses

In June 2012, 9.5% of Melbourne suburbs had a median house value in excess of $1 million and by June 2017 that figure had increased to 32.6% of suburbs.  On the flip-side, 24.3% of Melbourne suburbs in June 2012 had a median house value below $400,000 compared to just 2.7% by June 2017.

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Leith van Onselen

Comments

  1. When this housing bubble pops – the sheer number of migrants who have been brought in as part of the ponzi are going to create an enormous headache for society.

    This is not about skin colour – this is about a huge number of poorly educated low skilled workers suddenly out of work as employment sky rockets.

    The very same thing was done in the southern United States through the 1970-1990’s – mass migration of low skilled workers to deal with fruit picking, farm work, menial labour as the locals would no longer do it. Of course they came from South and Central American states and were incredibly hard working.

    Their kids however were not so keen – and the economic collapse in the 1980’s saw the rise and rise and rise of drug cartels with willing foot soldiers hoping to earn fast cheap money. As completely ABSURD as it sounds the entire Scar Face movie is based around this very period.

    The drug, gun, and gang violence in Southern United States today can be traced directly back to this mass influx of cheap labour during boom times suddenly unleashed during an economic melt down.

    If there is another global shock then I fear what will happen around the world where mass migration is already causing HUGE issues for those lamenting the loss of living standards, the bulwark is the racist appellation bandied about by the well to do middle class entirely unaffected by the regression to serfdom of their lower peers – the middle class always were cunts self serving arseholes.

    But when things finally start affecting them – they are the first to sneak out in the night – aren’t they Annabel.

    .

    • No, they won’t be a problem Soph, at least, not for society. All those immigrants will become emigrants. Look to Ireland for a recent example. They will liquidate and disappear back to their homeland filthy rich, likely leaving behind a mass of bad debt, which will be a problem for our insolvent banks, but that’s about it.

      • You can look to the number of Mexicans who left the US after the GFC. About a million returned, resulting in a period of net movement towards Mexico, and a decline in the number of Mexican born people living in the USA.

      • that is if we are bringing immigrants from developed countries but lot of them are coming from where they can’t go back. Sophie is right and I argued exactly same point couple of months back. High Immigration is double edge knife and it really hurts when employment slows down. Crime rate, favelas, violence – you name we will have it.

      • It’s the opposite, Nikola. Guarantee most of these immigrants from poor asian nations will leave at a moments notice.
        They did not immigrate to Australia to be slaves/2nd class citizens for the rest of their days. They came here to work ridiculously hard for a relatively short period of time. They came here to gamble on the housing market and make easy money. They came here to integrate as little as possible, knowing full well that it is only about getting as much money as possible from these fat white cunts. When it crashes, they will pack-up, and with their relative bonanza of wealth, they will go home richer than what they could have earned in 3 lifetimes worth of work back home. Good luck to any financial institution trying to recoup losses on a Vietnamese/Indian/Chinaman/etc who has gone home.

      • I’ve been saying the same thing for a while. When the immigrants who’ve bought here in recent years are paying off a 500k mortgage on a property that’s only worth 300k the prospect of being debt-free by simply leaving on a one way ticket back to where they came from will be an attractive one. Not all, but many. Added to which I firmly believe that the ‘locals’ here will turn on the immigrants as they always do during times of economic hardship: the Strayan ‘dream’ will turn into a nightmare for many, I suspect.

        Won’t be a happy time for anyone.

      • truthisfashionable

        @Dominic

        I think you are right, isn’t that exactly what all those western workers did during the gfc when the work dried up in Dubai?

        Sell what you could quickly, ship ‘home’ what you wanted to keep, then Walk away from all your debts, leave the financed car at the airport and never to return again.

      • Are these the same low paid, semi-skilled immigrants that have pushed our already unaffordable house prices up? Those dirty bastards, thank god our good and pure local people are not responsible.

    • “This is not about skin colour – this is about a huge number of poorly educated low skilled workers suddenly out of work as employment sky rockets.”

      Exactly. I don’t care who you are, what colour your skin, religious or sexual persuasion or if you speculate on property or not. We’re all in this together and a great number of people are going to get hurt, regardless of how long you’ve been here or where you came from. Nobody deserves to be the victim of an engineered bubble.

      The harm that this thing will bring really disturbs me and I loath it before it has even happened. I just hope I can spare my own family from it. We shall see.

      • Mining BoganMEMBER

        Harm it will bring? Will? The damage is done on the way up. On the way down you’re picking up the brooms for the clean-up.

    • rob barrattMEMBER

      Sophie
      I believe you are right about the forthcoming unemployment. However, I don’t think you should confine the phrase “self serving” to the “middle class”. Humans are competitive and, having struggled to get what they have, will go to any lengths to keep it. Your definition of “middle class” needs to be expanded to include:
      • Cashed up bogans;
      • The upper & political classes;
      • The unemployed who strive to get on compo for a nice steady income rather than queue at Centrelink;
      • Criminals.
      Nothing new here. I’ve used the following example before, perhaps ad nauseam: Watch the people (of any race or colour) around the luggage carousel at the airport. Instead of standing 2 paces back so they:
      • Can see their luggage coming; and
      • Are able to get it off without knocking people over .
      They crowd up next to the carousel, thus achieving the worst possible result. Voila the human race!

      Don’t expect SFA from your fellow (hu)man. Make your hay while the sun shines for you.
      The world will be inhabitable by carbon based life forms for another several billion years (even allowing for global warming!). It’s a huge mistake to think that a creature little advanced from a chimp that has evolved in the first third of the world’s life has any chance of long term success. Evolution will produce much more cooperative & organised creatures .

    • Not convinced majority of Auz immigrants involved in fruit picking. Most involved in information economy which is unfortunately becoming increasingly poorly paid. ABC 4 Corners coverage of pending housing correction (not crash) gave an example of a young Western Sydney couple who purchased 2 blocks of land one for their house & the other to build on & rent out. Greed is not something only akin to the middle-class. Better timed regulation would have protected them by preventing them buying another property at the very end of a boom. Unfortunately they probably will sell their other block at a loss in the near future, but I’m not convinced (as yet) they will lose their jobs.

      • You nailed it Supernova. Turnbull should know more about IT than most politicians. If a vested interest says “Aussies are incapable of networking a few computers together, Turnbull should know that is a lie”. But look at PM Bill English – he recently said on TV that Kiwis are incapable of driving a truck! Stop listening to the vested interests and look at the fact that Portugal has a shrinking population. Do they not have computers in Portugal?

    • Once they are unemployed they will have little option as I suspect the government will take welfare of the table for many of these people.

    • ” the middle class always were (cunts) self serving arseholes”
      Seriously unladylike language there Sophie. Better to use a mathematical identity, n’est-pas?
      And Annabel? Quelle mathematicienne avec cette nom?

      • Annabel thought that everyone who was raising issues about the NBN were just a pack of absolute whingers and completely over the top. Then she got NBN and her internet speed dropped in half and she announced on Twitter that she was sorry for questioning everyone.

        Really ? People were being sacked from her own work place for trying to deliver correct information on the issue.

        And as Matt Taibi points out – it is the press who are failing us – they are working with, flying with, dining with partying with the politicians and have come to align their own views on the great unwashed masses with those of the political class.

        Either way – exemplary of the attitude –
        baiser, j’ai le mien.

        To those questioning the middle class.

        The three traditional classes are the working class, middle and upper. The typical manor house with its aristocracy and servants saw the upper and lower working and living together. While the upper had little concern for the daily issues of the middle class, the lower class had no time.

        The upper and lower have traditionally gotten along very well. Little time for animal rights, for petty morality, for social issues etc. A mutual affection for the land, for hunting, for skills, craft, heavy drinking, partying, sex, a good laugh. While the wealthy traipsed around the world on their expeditions, travelled from manor to manor, castle to castle – it was always with the workers.

        The workers and wealthy enjoy their gambling together, hare coursing, ratting, fox hunting, poaching, shooting, drinking, rooting.

        The middle class are all fussed about religion, morals, social taboos……

        Almost everyone in Sydney and Melbourne is middle class – everyone.

        .

      • What a special Utopia you paint, Sophie.
        Let us return to the heady heights of your feudal utopia, so that working and upper classes can once more ‘interact’ with one another in ‘peace.’ It is, of course, the middle class that has unanimously ripped the guts out of western economies, and not those poor hedonistic elites. /s

        You have fallen for that most classic of parasitic ploys, turn the middle and working classes against one another, while the elites rape both from above. I say fallen for, but perhaps you belong to that idyllic class from above, and would love nothing more than to see it prosper unchecked, as the rats fight over scraps below?

    • Fruit picking? Dutton loves giving the best jobs to foreigners while his “intern” program says Aussies deserve nothing better than a beer pouring job.

      Gillard did not even think Aussies deserve a burger flipping job! She gave 457 visas to KFC!

      AUS seriously needs a job reservation system: ban foreigners from driving trucks and buses on government funded roads.

  2. “Their kids however were not so keen – and the economic collapse in the 1980’s saw the rise and rise and rise of drug cartels with willing foot soldiers hoping to earn fast cheap money. As completely ABSURD as it sounds the entire Scar Face movie is based around this very period.”
    Your right is is absurd. It is well documented the CIA was behind this in order to fund their clandestine operations in Latin America.

    Ever heard of Iran Contra ?

    • Not at all sure why you are bringing the Iran contra into to the mass migration in the 1970’s. Everyone knows about the Sandinista, the American hostage situation, the negotiations and CIA drug running – everyone.

      However it has very, very little to do with what is being discussed here.

      Do YOU know anything about the Bulgarian diplomatic flights gun running for the CIA ? Yeah – last week – you know – relevant.


  3. The Adelaide Bank/REIA Housing Affordability Report has been released for the June quarter has been released, which reveals that the percentage of household income required to service the typical Australian mortgage has increased by 0.2 percentage points to 31.4%

    So at 31.2% it was already over the 30% threshold at the last report, and likely a couple of reports before that (if 0.2% is a typical sized movement)?

  4. Oh look at the fucking Melbourne map, it matches this virtually fucking perfectly.

    http://i.imgur.com/aTGE6SV.gif

    China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China
    STOP

    • True, they’ve all been Frank Chung articles, even the one that quoted Leith on immigration. Good to see!

      A good article too!

  5. Re-posting as I think it will prove one of the great understatements in Australian economic history.
    September 5 2017, Governor of the Reserve Bank of Australia…
    “…In some cases, loans were being made where the borrower had only the slimmest of spare income,” Dr Lowe said.
    Fuck Phil…do you reckon???

  6. Jumping jack flash

    40 years to go, ladies and gents.

    There’s still a lot of room for a lot more debt and a lot more people in this once great country.

    The curious symbiotic and reciprocal relationship between debt and houses is streamlined perfectly to generate as much debt as possible while giving the guise of it being completely and utterly risk-free.

    The addition of debt generated by the banks, actually generates extra capacity for debt, and secures itself against risk, simultaneously.

    Then consider also the ability to become instantly and insanely rich from someone else’s debt. there is literally no way to become richer faster. Even the lottery, that elusive windfall, has a hard time keeping up with the ease and certainty of simply having a house and selling it to someone willing to take on a debt mountain.

    It is a system like none other.

    40 years to go, people. 4 million debt dollars (at least) for an average house in Sydney/Melbourne. And why stop there, it’s only debt. Its not like its real money you need to toil for a lifetime to get.