Housing affordability falls across capital cities
Houses have become less affordable in the June quarter following a slight improvement in March.
The Housing Industry of Australia's (HIA) Affordability Report found affordability fell by 3.7% during the June 2016 quarter, a 2.1% drop in affordability for the year. Capital city housing affordability fell by 4.3%, while the regional market saw a 1.9% improvement in affordability.
“Home price growth moderated in the early part of the year and the HIA Housing Affordability Index showed an improvement in affordability during the March 2016 quarter. However, in the June quarter dwelling price growth returned and the index reverted to the level we saw at the end of 2015,” HIA economist Geordan Murray said.
Murray said the headline index showed a decline in affordability, there was substantial variation in affordability around the country. He pointed to a 6.2% improvement in affordability in Perth, contrasted against a 6.2% decline in affordability for Melbourne.
“These differences in affordability align with the relative economic performance of these two states. The Western Australian economy is navigating the tail end of the mining boom which has seen conditions in the local labour market deteriorate and consequently the rate of population growth has fallen quite sharply. In contrast, Victoria has experienced a healthy level of growth in the labour force and continues to record the strongest rate of population growth in the country,” Murray said.
In addition to an improvement in affordability for Perth, Darwin and Hobart also saw housing become more affordable during the June quarter. The remaining five capital cities saw declines in affordability, with the sharpest quarterly decline recorded in Melbourne at 7.4%.
The report follows a study from Adelaide Bank and the Real Estate Institute of Australia that found affordability was at its best level since 2013.