Housing affordability has been deteriorating in all major cities in Australia with the exception of Perth to the year ended June 2016. This is according to research found in many Real Estate Companies across Australia.
According to Moody’s Investor Services, Australians in general spent an average of 27.6 percent of their monthly pay on their mortgages during the year ended 31 March 2016. This was a 0.6 percent rise from the same period a year before.
In contrast, average mortgage repayments in Perth have been on the downward spiral with the affordability trend going down from 22.6 per cent to 21.5 per cent. The affordability index for the whole country has generally improved in the last ten years.
Other cities in Australia have not been performing very well with Sydney being the most unaffordable city for both renters and property buyers. Brisbane has been declining in the affordability index for two years in a row. The only other cities that are moderately affordable are Hobart and Adelaide.
First home buyers have found it extremely difficult to get their first home in Melbourne and Sydney metropolitans as prices have gone through the roof. Luckily, Western Australia first home buyers are experiencing a cut in their home prices as the Barnett Government exempted them from transfer duty if they are paying up to $430,000.
While there are still pockets of unaffordability in Perth, the general trend has been good. SGS Economics and Planning associate Ellen Witte says the affordability in rent and property prices in Perth coincides with the end of the mining boom that the city has been experiencing in the most recent past.
In many cities in Australia, most households are committing from 30 per cent to over 80 per cent of their income on rent. Even for houses as low as $500 a week. This has put a lot of pressure on many households as there is little left for primary needs such as food, clothing, healthcare, and education.
The decision by the Reserve Bank of Australia to slash off 25 basis points off the cash rate to stand at 1.75 will have a positive effect on housing affordability. Perth stands to reap higher gains from the move than other cities in Australia.
For the three months to June, the median house prices in Perth have plummeted 1.4 percent to stand at $522,500 while the price of single units moved to $406,000 in June from a median of $436, 000 in March this year.