Australia in global house price growth top 10, but affordability improves

Australia in global house price growth top 10, but affordability improves
Australia in global house price growth top 10, but affordability improves

Australia sits in seventh place for strongest growth in the last 12 months and yet affordability appears to be showing improvements compared to a year earlier, according to industry reports.

The Knight Frank Global House Price Index, comparing 12 month changes from the first quarter of 2013 to the first of 2014, noted that Australia’s 10.9% scores it seventh place on the list.

Here’s the top 10 in the ranking:

  1. Dubai – 27.7%

  2. China – 17.5%

  3. Estonia – 16.2%

  4. Turkey – 13.8%

  5. Taiwan – 12.2%

  6. Brazil – 12.1%

  7. Australia – 10.9%

  8. Colombia – 10.6%

  9. United States – 10.3%

  10. Iceland – 9.7%

In fact, in 2012, a Demographia report put Sydney and Melbourne among the five least affordable cities in the world.

Despite these figures, the REIA/Adelaide Bank Housing Affordability report noted that housing across the country is actually increasing in affordability.

Read over page for the most to least affordable areas across the country.


Quotes to know

REIA president Peter Bushby:

“Compared to a year earlier, all states and territories showed improvements in housing affordability, but first home buyers remained at very low levels and made up just 12.8% of the owner occupier market.”

Damian Percy general manager Adelaide Bank:

“Unless a more determined effort is made on the part of the states and Commonwealth by working more closely and actively together with local government, developers and financiers – as the economy improves, there will be supply-side issues that will ultimately mean upward pressure on housing prices. I’d like to keep this debate rolling.”

In fact, it is the March quarter of 2014 that showed a “slight” improvement in housing affordability, noting that the proportion of income required to meet home loan repayments decreased by 0.2% to 30.6%. When compared to this quarter in 2013, this is an affordability improvement of 1.5%.

The average loan size to first time buyers, however, increased 0.6% over the March quarter, and by 3.2% since the same time in 2013. It now sits at $302,233, according to the report.

So who has it easiest across the country?

Here are the most, to least, affordable for new borrowers based on the proportion of family income required to pay the loan for the March quarter:

ACT – 19.8%

Tasmania – 25.2%

Western Australia – 26.4%

Northern Territory – 26.5%

South Australia – 27.4%

Queensland – 28.3%

Victoria – 32.3%

New South Wales – 34.6%

Australia-wide – 30.6%

THE KEY TABLES:

 Australia in global house price growth top 10, but affordability improves

Source: REIA/Adelaide Bank Housing Affordability report

Australia in global house price growth top 10, but affordability improves

Source: REIA/Adelaide Bank Housing Affordability report

The HIA-CBA Housing Affordability Index, as reported by Property Observer yesterday, noted that mortgage rates below 5% are still widely available, and that housing is now more affordable than it has been for a decade.

Rental affordability is also a concern for those currently considering the property market, particularly first home buyers grappling with any rental price increases.

Here is where it is least to most affordable across Australia:

ACT

No change in rental affordability over the quarter. It now sits at 18.0%. This is a 1.7% drop over the year from March 2013.

New South Wales

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.4%. It now sits at 29%.

Northern Territory

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.3%. It now sits at 34.0%. This is actually 1.4% down over the year from March 2013.

Queensland

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.6%. It now sits at 24%. This is actually 0.4% down over the year from March 2013.

South Australia

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.1%. It now sits at 23.2%. This is actually 1.1% down over the year from March 2013.

Tasmania

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.7%. It now sits at 27.1%.

Victoria

A further downturn in affordability was recorded, with the proportion of income needed to cover the median rent payments increasing by 0.4%. It now sits at 23.4%.

Western Australia

An upturn in affordability was recorded, with the proportion of income needed to cover the median rent payments dropping by 0.2%. It now sits at 25%.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

Tags: 
Housing Affordability International

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