Is housing in Australia at its most affordable in over 20 years?

If you’re considering buying, money is going to be one of the biggest factors in your decision-making process, if not the biggest. Luckily, as you might have heard, we’re in “unprecidented times” – and that means property is more accessible and affordable than ever.

The HIA-Housing Affordability Index for the June quarter 2020 shows that housing in Australia remains at its most affordable since 1999. This is a pretty big deal, given that the Housing Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments. Using it, we can see that all capital cities in Australia saw affordability improve in the June quarter.

The Housing Affordability Index grew by 5.6% across the country. If you want to buy in Perth, affordability increased by 7.1%, making it the most affordable capital city according to the index. Melbourne followed with a 6.9% increase in affordability, with Sydney close behind with a 6.1% increase calculated. Brisbane increased 5.0%, followed by Canberra (3.3%), Hobart (3.1%), Adelaide (3.1%) and Darwin (1.6%). Regional Australia increased by 4.9%.

Here’s the most important take away: this improvement in affordability means that it now requires less than 1.2 average incomes to service a mortgage on a median-priced dwelling in Australia’s capitals. This is a solid improvement from three years ago, when it took almost 1.5 times the average income to service the exact same mortgage. Repaying a mortgage has become less of a constraint due to this improvement in affordability. Homeowners have more disposable income to save (or spend), which is especially important given the general job instability in Australia right now.

For first home buyers, this massive improvement in affordability is key to their ability to enter the market on solid footing. With low interest rates, slow house price growth and relatively steady wage growth, FHBs have a far wider range of properties now on offer to them – along with the aforementioned increased ability to actually afford them. Of course, the biggest challenge now is actually obtaining the mortgage for the home you want.

If you know you want to buy, but you’re not sure where the best property is, we’ve compiled a list of some of the best throughout the states below. Start searching!

Written: 10 September 2020

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