Housing affordability explained: what does it mean for you?

By Will Keall

It is probably no surprise to Aussie homeowners when I say that housing affordability is a hot topic – among politicians, property industry professionals, consumers…. Nationwide, house prices have experienced a rise of 8.7% in the past year alone. 

A ‘monopoly-like’ approach of wanting to own everything is being blamed by some experts for the current pricing situation, while others credit tax incentives for local investors and an increase in international buyers as a part of the driving force behind the price hikes. 

In some areas, large amounts of medium to high density housing being constructed meeting the demand for low to mid-range housing options, forcing prices up as they face infinite demand.

Factors that could also be in play include older generation Australians who are resisting downsizing, and the attitude that property investment is a ‘safer’ alternative to the stock market. 

It’s not only housing prices that are experiencing this issue – media reports are reporting a rental market ‘affordability crisis’, with the average family spending more than half of their income on rent. While it’s easy to think the sky is falling after reading such reports, this situation affects everyone differently.

If you are renting and saving for a deposit:

Higher rents, particularly in capital cities like Sydney and Melbourne, make it harder for anyone who wants to live near the city centre to save for a home deposit.

Renters, unfortunately, have things a little harder than homeowners, especially low income families, who have to put almost two-thirds of their income towards rent. 

However, compromising on the location you live in now can give you the upper hand when it comes to putting away a larger amount of savings each week. In other good news for renters living in Victoria, the government is currently reviewing a proposal to introduce five to 10-year rental leases (taking inspiration from Europe).

If you are a homeowner with a mortgage:

Congratulations on buying into the property market! You now don’t have to worry about saving for that home deposit, but instead have a fortnightly or monthly loan repayment due. 

The housing affordability situation affects the price you paid for your property, which obviously affects the repayment amount.

If you are a property investor:

The issue of housing affordability can actually benefit property investors – the demand for housing means it’s more likely you’ll find tenants, and also means you may achieve a higher rental price. 

Will Keall, iMortgage’s general manager, has a wealth of marketing and business development experience gained in Australia and the United Kingdom. These include high level roles in a range of sectors such as financial services, insurance, travel and tourism, motoring and professional services.

Will played a pivotal role in the successful establishment of iMortgage. His dedication and passion for the mortgage industry have won Will the utmost respect as an integral part of the iMortgage brand.

A self confessed “numbers and brand geek”, Will calls himself a conservative investor with a long-term philosophy. He also believes it’s important to “love where you live.”

Will is a cricket and football tragic, who also enjoys running.


More Home Loan Guide