Adios housing affordability

CoreLogic has released housing affordability data, which shows that affordability peaked in the June quarter of 2019:

However, that was as good as it will get given the recent surge in values, especially across Sydney and Melbourne:

According to CoreLogic:

CoreLogic’s head of research, Tim Lawless, said the return of the “fear of missing out” was helping to push prices higher.

“We see more urgency coming back into the market, especially in Melbourne and Sydney, where housing values have risen 6 per cent and 5.3 per cent since May. If this trend continues, we could see property prices reach new highs early next year,” Mr Lawless said.

It’s hard to believe that even after the recent bust, which saw Sydney dwelling values fall 15%, Sydney’s dwelling value to income ratio was still an extreme 8.2.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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