Housing less affordable
Despite interest rates at 30 year lows and the availability of the First Home Owners grant, home ownership for first time buyers has become less affordable in the March quarter, according to the Housing Industry Association .
The latest Commonwealth Bank-HIA housing report, released today, shows housing affordability for first home buyers fell by 5.9 percent in the March quarter due to a 5.8 percent increase in house prices. The fall puts housing affordability at its lowest point in nearly two years.
Ruth Morschel, the HIA’s executive director of Public Affairs and Policy, says that the fall is indicative of the strength in demand for first homes.
“The downside of this, however, is that more buyers means higher prices and we are clearly seeing this in the lower-priced end of the market,” she says. “The average first home buyer price across Australia was $182,900 twelve months ago. For this quarter, it was $222,700 - a rise of 22 percent.
“On the other hand, the new home market with the higher levels of new home grant has witnessed very little price rises and inflationary effects. Affordability in this part of the market is much higher than for established dwellings.”
The March quarter Affordability index shows that the loan repayment needed to service a typical first home mortgage rose by $65 a mont to $1153, absorbing 19.8 percent of average household income. In the December quarter of 2001, 18.6 percent of household income was required to meet mortgage commitments and in the March quarter of last year, 18.5 percent. Mortgage rates stayed steady at 6.05 percent over the period.
Source: Building Products News.
6-May-2002