Housing most affordable since 2004


Buying a home in Australia has not been this easy in years, especially for first homebuyers, according to a recent industry report.

Sinking property prices, dramatically lowered interest rates and expanded government incentives have made now the most affordable time to buy a home in the past five years, according to the Housing Industry Association (HIA).

The HIA's first homebuyer affordability index shows that in the December quarter alone the average home loan repayment dropped by 26% to reach just above $2,000 per month. More specifically, the average monthly payment was $740 less than in the previous quarter.

"The improvement in housing affordability means those on a more modest income can now contemplate a home of their own," said HIA chief executive Chris Lamont.
Lamont noted that, based on the HIA economic modelling, 135,000 households have come out of mortgage stress since December 2008.

"Previously, a household would have to be earning in the order of $85,000 per annum to afford a modestly priced home without going into severe mortgage stress," said Lamont.

The HIA said mortgage payments are now 19.5% of total first homebuyer income, compared to 27.2% in the September quarter.

In some areas of the country, the affordability had reached massive levels of improvement. Regional NSW, for example, saw affordability improve 41% over the previous quarter to reach a six-year high, according to the HIA. In Brisbane, affordability improved by 50%.

Unemployment rates have also risen in some places, however, making many buyers unsure about whether they can commit to buying a property with so much economic uncertainty.

Easing those worries for some first homebuyers has been the falling price of homes. Dwelling median prices in first homebuyer properties slipped 12.8% over the previous year in Sydney, 15.9% in Perth, and 7.8% in Brisbane. Only Adelaide saw any growth of the mainland capital cities, up 7.9% from the previous year.

Please see our Home Loan Calculator for more information.

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