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 that 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.