Home Loans News: 23 Feb 2010
A leading industry group says housing affordability has slumped more than 20 per cent in the past year due to rising interest rates and house prices...
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The Housing Industry Association-Commonwealth Bank first home buyer affordability index dropped 18.4 per cent in the December quarter, to be 22.3 per cent down on levels seen a year ago.
The HIA says first home buyers had a small window of better affordability when house prices eased, interest rates dropped, and the Federal Government boosted the First Home Owners Grant during the peak of the global financial crisis.
However, the HIA's senior economist, Ben Phillips, says all those trends have reversed and not enough new houses are being built.
"Australia's fast growing population is pushing new dwelling requirements to record high levels. Without the required new home building to keep up with underlying requirements, house prices and rents are expected to continue pushing upwards through 2010," he noted in the report.
"With housing affordability heading backwards, housing policy must be front and centre of the policy debate as Australia heads towards a federal election later in the year."
The HIA is predicting around 152,000 new dwellings to be started in 2010, but says that is well short of the 190,000 it estimates is required to keep up with a growing population.
The association says affordability deteriorated in all capital cities and regional areas during the last three months of 2009, but the worst falls were in Sydney, Brisbane, Hobart and Canberra.
Mr Phillips says affordability has fallen to levels not seen since 2008, when interest rates were much higher.
"Sydney remains the most unaffordable city across the country, but you've also got Brisbane, Melbourne, Perth, Canberra, all these cities are not that far behind Sydney," he told ABC News.
"So there's certainly been a bit of a catch up. Particularly in Melbourne we've seen some fairly strong house price increases. Of course all of the regions have been impacted by interest rate increases over the past quarter."
SOURCE: ABC News
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