Shock horror! Falling prices improves housing affordability

By Leith van Onselen

With dwelling values across Sydney in freefall, down 14.5% as at end-April:

Housing affordability across Sydney’s West and Southwest is drastically improving, according to CoreLogic data:

New figures showed median prices in 20 suburbs — including Bankstown, Granville and Harris Park — are now affordable for those earning Sydney’s average full-time salary of $83,000 a year.

Median prices in these areas had hit levels of up to $640,000 last year but have now dropped to under $500,000, according to CoreLogic.

This means the potential mortgage repayments will no longer eat up more than 30 per cent of an average buyer’s income, a measure often used to determine if a purchaser can afford a loan on the home…

Those on about $72,000 a year can now afford to go looking for apartments in Rosehill in the Parramatta area and Liverpool. The bulk of the units in both suburbs are now under $450,000…

Last year, people on $72,000 could only happily go home hunting in a cluster of suburbs around Blacktown, Campbelltown and Fairfield, such as Carramar, Mount Druitt, Leumeah, Canley Vale and Ambarvale…

First homebuyer Darlene Chuon, 26, recently capitalised on the favourable buying conditions. She snapped up a one-bedroom unit in new Frasers Property development Ed.Square in Edmondson Park and said she was surprised how affordable the prices were…

Prices in the development started from $445,000, which Ms Chuon said was well below other properties she saw in areas such as the northern beaches and inner west…

CoreLogic analyst Cameron Kusher said diminished investor participation in the market helped fuel the drop in prices.

Only in Australia could a $445,000 one-bedroom unit 32 kilometres South West of Sydney’s CBD be considered “affordable”.

Nevertheless, the falling prices brought about by “diminished investor participation” is unambiguously good for first home buyers (FHBs) locked-out of Sydney’s housing market.

While politicians often throw self-defeating gimmicks at FHBs in the name of ‘housing affordability’, there’s only one genuine solution: let values fall.

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