Perth be­com­ing af­ford­able

Canning Gazette - - RESIDENTIA­L -

EAST coast buy­ers could face an­other af­ford­abil­ity cri­sis, ac­cord­ing to the June quar­ter 2019 ANZ Core­l­ogic Hous­ing Af­ford­abil­ity Re­port.

The re­port said af­ford­abil­ity peaked dur­ing the quar­ter and prop­erty prices on the east coast could reach record highs in the first half of 2020 if they con­tin­ued to in­crease at cur­rent rates.

Na­tion­ally, real es­tate val­ues fell 8.4 per cent from the 2017 peak to the June 2019 trough, which pro­vided some tem­po­rary re­lief to hous­ing af­ford­abil­ity, par­tic­u­larly in more heated mar­kets.

The re­port also showed na­tional dwelling val­ues were 6.5 times higher than gross an­nual house­hold in­comes in June, the low­est level since De­cem­ber 2013.

“Al­though af­ford­abil­ity has improved fol­low­ing a down­turn in hous­ing val­ues, June 2019 marked a turn­ing point as dwelling val­ues again be­gan to out­pace house­hold in­comes across cap­i­tal cities, with the ex­cep­tion of Perth and Dar­win,” ANZ se­nior economist Felic­ity Em­mett said.

“The re­bound in prices is be­ing driven by a num­ber of fac­tors, in­clud­ing record low in­ter­est rates, eas­ier ac­cess to credit and more cer­tainty around tax ar­range­ments.”

Core­l­ogic head of re­search Tim Law­less said there was more ur­gency com­ing back into the mar­ket, es­pe­cially in Mel­bourne and Syd­ney where hous­ing val­ues had risen 6 per cent and 5.3 per cent since May.

“If this trend con­tin­ues, we could see prop­erty prices reach new highs early next year,” he said.

“How­ever, there is still some good news for prospec­tive buy­ers and ren­ters.

“The re­search shows house­holds are now ded­i­cat­ing the small­est pro­por­tion of their in­comes to­wards pay­ing a new mort­gage since early 2004 and ren­ters are spending the low­est pro­por­tion of their in­come on ac­com­mo­da­tion since 2007.”

In the June quar­ter Syd­ney was the least af­ford­able cap­i­tal city mar­ket, with a dwelling value to in­come ra­tio of 8.2 and 43.7 per cent of house­hold in­come re­quired to ser­vice a mort­gage with an 80 per cent loan to value ra­tio.

Po­ten­tial buy­ers needed 11 years to save a 20 per cent de­posit based on sav­ing 15 per cent of house­hold in­come.

Perth was one of the more af­ford­able mar­kets with a dwelling value to in­come ra­tio of 5.2, mort­gage re­pay­ments re­quir­ing 27.4 per cent of house­hold in­come and buy­ers only need­ing 6.9 years to save a 20 per cent de­posit.

Times have cer­tainly changed: in 2006 Perth was Aus­tralia’s most un­af­ford­able cap­i­tal city.

Dwelling val­ues were

8.3 times higher than house­hold in­comes and it took house­holds an average of 11 years to save for a 20 per cent de­posit – com­pa­ra­ble to Syd­ney now.

With the me­dian prop­erty price fall­ing by over 20 per cent since its peak in 2014 and in­comes ris­ing, af­ford­abil­ity has improved sig­nif­i­cantly.

The Kwinana re­gion was Perth’s most af­ford­able, with a dwelling to value ra­tio of 3.7, fol­lowed by Ser­pen­tine-jar­rah­dale at 4.0.

It was also cheaper to buy than rent in the Kwinana area.

At 11.3 the dwelling to in­come ra­tio was high­est in the Cottes­loe-clare­mont re­gion, where it took 15 years to save a 20 per cent de­posit and nearly 60 per cent of house­hold in­come was re­quired to meet mort­gage re­pay­ments.

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