Housing Affordability Sinks in June Quarter
Interest rate hikes and rising home values sent housing affordability close to a record low in the June 2010 quarter. This is recorded and reported by the latest HIA-CBA Housing Affordability Report which shows affordability deteriorated in most capital cities and regional areas in the three months to June.
This is significant for would-be first home buyers as housing affordability slips away and so too does the chance for many Australians to realise their dream of owning a home.
The HIA-CBA Housing Affordability Index fell by 9.1 per cent in the June 2010 quarter to be 32 per cent lower compared to the same period last year. The Index combines interest rates, household incomes, and home prices to determine affordability conditions.
Affordability declined by 9.5 per cent over the June 2010 quarter across the nation’s capital cities and was down by 6.7 per cent in Regional Australia. The largest falls were recorded in Sydney (-9.1 per cent), Regional Victoria (-9.0 per cent), Regional Tasmania (-8.8 per cent), and Adelaide (-8.7 per cent).
The big city dwellers will be confronted with the twin challenges of a tight rental market which is putting upward pressure on rents as well as making the deposit and affordability challenges. Mortgage holders may be inclined to stay put as well given the high prices of residential real estate choosing rather to consider other options such as renovation and using home equity to negotiate mortgage refinancing.