Housing ladder steeper

THE Reserve Bank has painted a bleak picture of the quality of homes affordable to firsttime buyers after the bull run in the property market.

In an illuminating new report, the central bank says such homes are falling in quality, have fewer bedrooms and are further from the CBD than in the past.

The situation for renters is also downbeat, with the proportion of households in rent stress rising across nearly all capital cities.

In its bulletin for the December quarter, published yesterday, the RBA said Sydney was the worst market for firsttime buyers.

There, the average potential first-time buyer could afford little more than 10 per cent of homes sold there last year.

The proportion was at the lower end of historic averages, as over the past 20 years, firsthome buyers could generally afford between 10 per cent and 30 per cent of the homes for sale in the city, depending on the point in the housing and interest-rate cycles, the RBA said.

In Melbourne, first-home buyers could afford a little over 20 per cent of homes sold last year, although in the past that proportion has often been at about 30 per cent.

In the late 1990s, it rose to 50 per cent in Melbourne.

Nationally, first-time buyers could afford about 32 per cent of homes sold – about the average of the past 20 years.

The most accessible capital city was Hobart, with about 60 per cent of homes within reach of first-time buyers.

Housing affordability has become a hot political issue in recent years, with Sydney prices rising more than 70 per cent since 2012, according to researchers CoreLogic, before edging lower in recent months amid regulatory clamps on lending and a rise in listings.

Of the homes that were deemed within reach of firsttime buyers, the RBA said there had been “some structural decline in the quality of housing that is affordable to first-home buyers”.

For example, the average number of bedrooms in homes considered accessible had fallen in all capital cities over the past 20 years.

First-time buyers could also expect to live further from the city, as the average distance between affordable homes in Sydney and the CBD had trended up consistently over the past 10 years.