From the HIA today comes news that mortgage affordability remains poor, despite a modest improvement in the September quarter:
“Despite the poor levels of housing affordability there are signs of improvement for home-buyers, stated Tim Reardon, HIA’s Principal Economist.
“The HIA Housing Affordability index for Australia improved by 0.5 per cent in the September 2017 quarter but still remains 4.4 per cent below the level recorded a year ago.
“Housing Affordability has been deteriorating in Australia for decades, particularly in capital cities, as demand for new housing greatly exceeded the supply.
“Recent interventions by the government, through APRA, to curb growth in investor activity may have improved affordability for owner-occupiers.
“As a consequence of this intervention it appears that the market has responded with higher mortgage rates for investors and eased rates for owner-occupiers.
“This has had the unintended consequence of improving housing affordability for owner-occupiers.
“Irrespective of intent, this is positive news for owner-occupier buyers in the affordability equation…
“Sydney retains the mantle as the nation’s least affordable housing market despite the affordability index showing a modest improvement in affordability during the quarter. It still takes twice the average Sydney income to service a mortgage on a median priced home in Sydney while avoiding mortgage stress.
Brisbane, Adelaide, Perth and Darwin all recorded modest improvements in affordability in the September quarter. Melbourne, Hobart and Canberra each recorded a modest deterioration in affordability during the quarter.
Regular readers will know that I place little faith in this index (see here, for example). The “modest” deterioration of affordability in Melbourne, where dwelling prices have rocketed, is a case in point.
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.
