The release of today’s HIA Affordability Report shows how further gains in dwelling prices have caused housing affordability to deteriorate sharply during the December 2016 quarter.
“During the December 2016 quarter, housing affordability across Australia worsened by some 7.3 per cent due to the recent uplift in dwelling prices,” explained HIA Senior Economist, Shane Garrett.
“However, Perth experienced a further improvement in affordability and today’s report also shows how home purchase remains particularly accessible in markets like Tasmania, regional South Australia, regional Western Australia and regional parts of the Northern Territory,” added Shane Garrett.
“Nationally, housing affordability has managed to move in the wrong direction in many major cities despite the fact that interest rates are at very low levels. The sluggish pace of earnings growth in the economy has been an impediment to better affordability,” Shane Garrett pointed out.
“Achieving sustained improvements in affordability requires stepping back and looking at the big picture. Housing affordability is front and centre in everyone’s mind once more. Whilst there is no single solution, there are some key policy levers that governments could use to provide some relief,” concluded Shane Garrett.
Affordability worsened in six of the eight capital cities during the December 2016 quarter. The biggest deterioration was in Melbourne (-11.6 per cent), followed by Canberra (-10.7 per cent) and Sydney (-7.3 per cent). Affordability has also become more difficult in Darwin (-3.8 per cent), Brisbane (-2.9 per cent) and Adelaide (-2.3 per cent) during the December 2016 quarter. Only Perth (+2.1 per cent) and Hobart (+1.2 per cent) saw affordability improve during the quarter.
Based on the HIA Affordability Index scores for December 2016, affordability conditions are the most challenging in Sydney (54.7), followed by Melbourne (66.0), Canberra (76.6), Brisbane (85.3) and Darwin (85.3). By some margin, Hobart (117.8) is the most affordable capital city. Perth (96.6) is the second most affordable capital, followed by Adelaide (93.0).