Affordability eases for owner occupiers, toughens for investors

While increasing levels of government regulation have made housing affordability tougher for property investors in recent months, conditions have eased slightly for owner occupiers as a result, according to the Housing Industry Association (HIA).

The HIA Housing Affordability Index improved by 0.5% over the September 2017 quarter. Despite this improvement, the index remains 4.4% below the level recorded at the same time last year.

According to HIA, the gradual, decades-long deterioration of Australia’s housing affordability, particularly in the capital cities, can be partially attributed to demand for new housing greatly exceeding the supply.

HIA principal economist, Tim Reardon, said that recent initiatives from the federal government and the Australian Prudential Regulation Authority (APRA) have resulted in higher interest rates being charged to property investors.

“This has had the unintended consequence of improving housing affordability for owner-occupiers.”

“Irrespective of intent, this is positive news for owner-occupier buyers in the affordability equation.”

The HIA Housing Affordability Index also found that despite the modest improvement across the overall market, Sydney is still Australia’s least affordable housing market, with a mortgage on a median priced Sydney home requiring twice the average Sydney income to avoid mortgage stress.

In other areas around Australia, modest housing affordability improvements were recorded in Brisbane, Adelaide, Perth and Darwin over the September quarter, while modest deterioration was recorded in Melbourne, Hobart and Canberra.

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