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The verdict is in and it’s inconclusive: homes are becoming less affordable – but they’re also becoming more affordable.
CommSec analysis and a housing index suggest housing has become cheaper, but an expert roundtable has concluded it is becoming harder for first home buyers to enter the market.
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CommSec chief economist Craig James told news.com.au that housing was slightly more affordable than it was a decade ago.
“Over the past year, the median home price rose by 5.9 per cent, outpacing the 1.7 per cent lift in income per household,” he said.
“But interestingly, over the past decade, the average income per household has risen by 70.6 per cent, outpacing a 66.7 per cent lift in home prices.”
Mr James said people spend more on homes than they did a decade ago, so they think housing is less affordable.
In related news, the Housing Affordability Index declined by 0.5 per cent from the September quarter to the December quarter, according to the Housing Industry Association (HIA) and Commonwealth Bank.
However, the index was still 8.4 per cent higher than in December 2012.
HIA chief economist Harley Dale said the improvement had been driven by low interest rates.
“Those in the housing market – or who have been on its cusp and then entered in recent years – have experienced a considerable improvement in affordability,” he said.
Meanwhile, attendees at a housing affordability roundtable held at Parliament House in Canberra last week talked about a lack of affordable housing.
The roundtable featured Social Services Minister Kevin Andrews and leaders from the real estate, construction, finance and community sectors.
According to a communiqué signed by the MFAA, Adelaide Bank, Genworth and the Real Estate Institute of Australia, homeownership is declining and conditions are becoming harder for first home buyers.
“In November 2013, the proportion of first home buyers in the total number of owner-occupied housing finance commitments dropped to its historically lowest point,” they said.
“First home buyers currently face significant challenges accessing affordable housing. This suggests a need for policymakers to address the issue.”
The roundtable identified an undersupply of housing as a “major driver of increasing house prices and declining affordability”.
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