The ANZ CoreLogic Housing Affordability Report for November is out and shows that affordability has worsened for prospective buyers, mortgage holders and renters, with worse to come in 2024.
Prospective home buyers face a triple whammy of factors conspiring against home ownership.
First, rents are rising strongly, which makes saving a deposit more difficult.
It already takes 10 years for the median household to save up a 20% deposit on the median priced Australian home, according to CoreLogic.
Second, home values are rising, pushing home ownership further out of reach.
Finally, mortgage rates continue to rise.
The next chart shows the gap between what the median buyer can afford and the actual median price, which is at its widest level in more than 20 years:
The median capital city home in Australia is valued at $741,000. However, if the median household wanted to avoid mortgage stress, they could only afford to pay $479,000.
Put another way, the median household would need to spend 46.2% of their income in repayments on the median home, assuming they had a 20% deposit.
“There’s probably more challenges than ever for first home buyers trying to get into the market”, noted Eliza Owen, CoreLogic’s head of Australian research.
“The median dwelling value, for the median income, is not really serviceable with a 20% deposit at the moment”.
“If you don’t own housing already, it’s very difficult for incomes to keep pace with the movement of values, particularly for houses”, she said.
ANZ senior economist Adelaide Timbrell said the housing affordability situation will likely worsen next year given both house prices and rents will continue to rise.
“We’re not seeing any reason to think there’s going to be a turnaround in housing affordability any time soon”, she said.
The Australian Dream continues to drift further out of reach, made worse by the Albanese government’s record immigration program, which is pushing up house prices, rents, and interest rates.
