Australia | Jan 22 2007
By Chris Shaw
Australian housing prices may not be experiencing the boom of a few years ago, but this has not made buying a home any more affordable for the average Australian and first home buyers in particular.
This is reflected by a 5.5% fall in the December quarter in the Housing Industry of Australia (HIA) and Commonwealth Bank’s (CBA) First Home Buyer Affordability Index, leaving it 15.5% lower than a year ago.
The index has now turned below 100 for the first time in its 22 year history, four straight quarterly falls leaving it at 97.9.
The HIA/CBA attribute the ongoing weakness to a combination of a 4% rise in the median first home price, which now stands at $376,000, as well as the impact of the three increases in interest rates last year.
The group estimates the monthly repayment on a typical first home mortgage is now $2,332, up 6.3% from the previous figure of $2,194. This has pushed mortgage repayments to 30.7% of total first home buyer income, an increase of 1.7% from September and indicative of how affordability is declining.
While figures suggest the Sydney housing market is lagging the rest of the country it is not clearly reflected in affordability terms, as the group notes there have been falls in both metropolitan and regional areas across Australia when compared to figures from a year ago.
New South Wales recorded a 4.7% fall in the December quarter, worse than the 3.9% fall in Queensland and the 3.8% in Victoria. Western Australia continues to record strong house price increases, with affordability there declining by 7.4%, while South Australia almost matched this with a 7.2% fall. Tasmania recorded a 4.3% decline, while affordability in the ACT fell 6.8%.