Housing becoming more affordable?

By Gerv Tacadena | 30 Oct 2020

Australian homeowners and would-be buyers have experienced improved housing affordability, with the share of income needed to meet repayments declining over the year to September, according to the latest report from Moody's Investor Service.

Australian households with two income earners needed 23% of their monthly income to meet mortgage repayments on new loans in September. This was lower than the 10-year average for the month at 26.4%.

Two main factors have driven the improvement in affordability over the period: rate cuts and lower house values due to the impacts of the COVID-19 outbreak.

Over the five months to September, housing prices declined by an average of 1.5% across Australia. However, prices in the month were still 3.2% higher than last year.

"Housing prices will likely see some downward pressure as the result of the macroeconomic weakness, albeit the impact may be muted due to the low interest rates," the report said.

While there are concerns about household incomes being under pressure as government support measures end in the coming months, the report said the risks will be outweighed by the impacts of lower rates and prices.

"We expect housing affordability will continue to improve moderately over the next 12 months," the report said.

Of the five major capital cities, Perth remained the most affordable for buyers. New borrowers in the city only need 15% of their income to meet mortgage repayments.

Sydney, on the other hand, remained the most expensive. However, the proportion of income needed to meet repayments in the city went down from 30.9% last year to 29.9% this year.

The table below shows the housing affordability indicators in the five major capital cities in the country:

Housing affordability continued to improve, driven by lower rates and cheaper house prices.

Top Suburbs : north epping , revesby hts , menai , freshwater , alexandria


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here