Australia's skyrocketing property prices have pushed housing affordability levels to a new low not seen in about 23 years, the latest data showed.
The quarterly Housing Industry Australia (HIA)/Commonwealth Bank Housing Affordability Index fell by 0.60% to 97.8 in the March quarter and was 10.3% lower compared to a year ago as the average annual household income failed to keep up with increases in house prices and interest rates. This marked the fourth consecutive decline in housing affordability across the country.
First homebuyers were particularly hit hard as monthly mortgage repayments
rose by 1.5% to $2,387. This accounts for a third (30.7%) of their total income.
Ron Silberberg, managing director, HIA said the housing affordability crisis shows all the signs of structural supply constraints and not part of some market cyclical trend that will correct itself. He noted that if nothing is done soon, the housing affordability crisis may go on until the year 2022.
"With the Australian economy in great shape and with record national surpluses, more needs to be done to alleviate housing stress and to assist those families battling to afford a roof over their heads. Only a targeted whole-of-government approach will make inroads into what is a massive economic and social challenge for Australia," he said.
Robert Caulfield, managing director with Archicentre agreed. He warned that first homebuyers in Australia could become an endangered species if governments at all levels failed to address the cost of planning, red tape and excessive government taxes on housing.
"Pricing first homebuyers out of the market or leaving them to the mercy of lending procedures that see them only gain temporary ownership of the great Australian dream before their family home is repossessed could create an epidemic of social dysfunction," he said.
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