Housing affordability has significantly improved across Australia, according to the latest report from the Housing Industry Association (HIA).
Data from the HIA Affordability Index showed that affordability rose nationally by 2.2% in the March 2019 quarter, representing the fastest improvement in affordability since 2013. HIA’s Affordability Index is calculated for each of Australia’s eight capital cities and regional areas on a quarterly basis. It takes into account the latest dwelling prices, mortgage interest rates, and wage developments.
“The improvement in housing affordability has been experienced across the country, with the exception only of Tasmania and the ACT, where ongoing house price growth has seen affordability remain static,” said Tim Reardon, chief economist at HIA. “The boom in home building of the past five years is a key factor behind the improvement in housing affordability. With completions of new homes remaining at elevated levels, affordability is poised to continue to improve.
Reardon also pointed out that continued wage growth has contributed significantly to the improvement in affordability, with rising incomes in Sydney and Melbourne leaving a particularly lasting impact.
“Affordability in Sydney deteriorated to an extent that in June 2017 it required two average Sydney incomes to be able to afford repayments on an average Sydney home,” said Reardon. “[But] in just over a year this has improved to only requiring 1.8 standard incomes to purchase the same home. Similarly, in Melbourne the Affordability Index has improved by almost 10% in a year.”
Five of the eight capital cities saw improved affordability over the year to March 2019. Sydney continued record the greatest improvements, with its index up by 12.4%. This was followed by Melbourne (up 9.6%), Perth (up 7.7%), Darwin (up 5.9%), and Brisbane (up 2.5%). On the other hand, affordability deteriorated in Hobart (down 5.1%), Canberra (down 5.1%), and Adelaide (down 1.1%).
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