Housing affordability fell to a record low in the quarter to June as the federal government failed to address the issue, according to the Housing Industry Association (HIA).
The affordability index fell by 2.7% in the quarter, and was 6.5% lower than a year ago. HIA blames the 5% rise in the median house price that outweighed the benefits of a stronger income growth and a stable rate environment.
The monthly loan repayment on a typical first-home mortgage increased from $2,387 to $2,506. Mortgage repayments now account for 30.8% of an average first homebuyer's income, up by 0.8% on the March quarter.
Ron Silberberg, managing director of HIA, said a government response was urgently required, especially following the recent interest rate rises.
"The deterioration in affordability will be exacerbated with last week's increase in interest rates devouring the increase in median income following the 1 July tax cuts. The situation requires a response form the three tiers of government in implementing policies to address the erosion in affordability."
Silberberg added that while the Australian economy is performing well, an increasing number of Australians are now being left behind as the degree of housing stress felt by both mortgage holders and renters continues to intensify.
HIA has suggested three strategies, which it believes should be adopted at a government level to combat affordability problems.
The first is a residential infrastructure fund with federal funding to offset taxes, charges and development contributions on new houses. The second is a home supersaver scheme, allowing employees to salary sacrifice for a home deposit, while the third strategy is to double the depreciation allowance for affordable housing in the private rental market.
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