Why Housing Affordability Is at a Record Low Even as Prices Fall

Recent data show that, despite a modest 7 % fall in median house prices, national housing affordability has reached its lowest point on record. The drop in prices was not enough to offset other pressures on buyers.

A key driver is the rise in mortgage interest rates. Angus Moore, senior economist, said the three RBA interest‑rate hikes made in February, March and May increased mortgage rates and further constrained household borrowing capacity.

Because of higher rates, mortgage repayments now take up 35.5 % of average household income – the biggest share since 1989. According to data from realestate.com.au, a household earning about $125,000 a year can afford only 12 % of the homes sold across the country.

The affordability squeeze is felt everywhere. The report found affordability declined in every state, with South Australia the least affordable at 7 % of homes and Victoria the most affordable at 16 %.

Economists say the situation will not improve until the supply of new homes rises sharply. Without a significant increase in housing construction, the combination of high loan costs and limited stock will keep affordability at historic lows.

COPYRIGHT DISCLAIMERS

4English does not own the rights to this content. All rights belong to the owner. 4English only uses this content to help users learn English via the app's features. Contact to request the removal of your content: contact@4englishapp.com.

Latihan mendengarkan