Falling house prices have led to only marginal improvements in affordability, it has been claimed.
Comparison site RateCity has claimed a falling housing market combined with rising incomes means housing is now more affordable than five years ago. However, RP Data has stated that housing has some way to go to combat affordability concerns.
"As property values ease and the cost of goods and services continue to increase, property becomes relatively more affordable. Therefore, it's unlikely that that a couple of quarters of falling values will result in a substantial improvement in affordability; however, if property values continue to grow at a rate below the growth in inflation (as we anticipate) affordability will continue to improve," RP Data researcher Cameron Kusher said.
Kusher said inflation-adjusted data shows property values have fallen 2.4% in real terms for the quarter. The data has also indicated capital city property values have declined 5.8% from their peak during the March 2010 quarter.
Despite these recent declines, Kusher said property growth has outpaced inflation for much of the last 15 years, resulting in property becoming more expensive in relative terms. If growth remains subdued, though, Kusher said the property market could make headway on affordability.
"Given the expectation of limited value growth as a result of consumer conservatism and limited availability of finance, by inflation-adjusted terms and real terms homes are likely to continue to become relatively more affordable. This is great news for potential home owners at it will make home ownership a more realistic prospect over time," he remarked.
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