The third quarter of 2014 showed an improvement in housing affordability nationally with the proportion of income required to meet loan repayments decreasing by 0.5 percentage points to 30.4%.
According to the
Adelaide Bank/REIA Housing Affordability Report, all states and territories except Queensland recorded improvements in housing affordability. Western Australia showed the greatest improvement with the proportion of income required to meet loan repayments falling by 0.7 percentage points, to 25.9%.
With all the media reports about booming house prices in Sydney, it comes as no surprise that New South Wales remained the least affordable state for homebuyers with the proportion of income required to meet loan repayments 4.1 percentage points above the national average. The Australian Capital Territory remained the most affordable state or territory in which to buy a home with the proportion of income required to meet loan repayments sitting at 19.4%.
However, Adelaide Bank general manager of third party lending Damian Percy says although this is welcome news, there are questions as to how long it will last.
“The Housing Industry Association estimates that we need to build 180,000 homes per year to get close to keeping up with demand. We may have met that target this year, but now appear to be moving back below this level, according to the ABS. When demand exceeds supply, prices go up. With three levels of government all ‘helping’ to manage the land supply and taxation situation, bottlenecks result.”
Percy also believes that there should be more investment in cities other than Sydney and Melbourne, to encourage more people to move outside of these hot spots.
“On current projections, in 40 years, an additional 20 million people will be living in Australia. So where will they all live? If history is any guide, mostly in Sydney and Melbourne. This must change. I’d like to see more of the ‘vision thing’ with policies and infrastructure set in place to provide sustainable employment opportunities in cities such as Canberra and Adelaide and in bigger towns on the coastal fringes where intra-state migration is occurring.”
