“Softer home prices in Sydney contributed to improved housing affordability during the final quarter of 2017,” commented Shane Garrett, HIA Senior Economist.
The HIA Affordability Index is produced quarterly and measures the mortgage repayment burden as a proportion of typical earnings in each market. A higher index result signifies a more favourable affordability outcome.
“The HIA Housing Affordability Index saw a small improvement of 0.2 per cent during the December 2017 quarter indicating that affordability challenges have eased,” added Mr Garrett.
Home prices in Sydney are now slightly lower than they were a year ago and this is making home purchase a little more accessible, particularly for First Home Buyers.
“Affordability conditions in Sydney are still more challenging than any other city. After Sydney, Melbourne has the second highest mortgage repayment burden.
“It is often overlooked that affordability conditions are favourable in the markets outside of Sydney and Melbourne. Housing prices are more affordable in the other six capital cities today than has typically been the case over the past 20 years – primarily due to very low interest rates.
“Housing affordability is still a very acute problem.
“To win the affordability battle, governments need to make tough decisions on reducing the tax burden on new home building, speeding up the planning process and releasing new residential land in a more timely fashion,” concluded Shane Garrett.
Hoocoodanode that falling prices made stuff cheaper?
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.
