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Housing affordability remains within long-term averages, according to surprising testimony from the Reserve Bank of Australia.
Assistant governor Malcolm Edey told the federal Inquiry into Affordable Housing that there has been minimal movement in the ratio of mortgage repayments to disposable income.
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“On that metric, housing affordability in Australia has fluctuated around a broadly stable average over the past three decades, with average repayments varying between around 20 and 30 per cent of disposable incomes,” he said.
“Currently this figure is a bit below average, but it has been rising in the period since [February] as the housing market has gathered momentum.”
Mr Edey said although the ratio of housing prices to incomes had increased “substantially” during the same 30-year period, this had been “more than offset” by falls in financing costs.
He also said that any housing affordability problem could not be due to finance because mortgages are cheap and readily available.
Mr Edey said first home buyer grants could have some impact on affordability, but that they would only push up prices if they weren’t accompanied by an increase in housing.
However, he also noted historical obstacles to increasing supply, including regulatory constraints, zoning laws, geographical barriers and the cost structure of the building industry.
“There are also obstacles to affordable housing created by Australia's unusually low-density urban structure, though this is gradually changing,” he said.
[Related: Pointing the finger over high housing prices]
