New data from Proptrack has found housing affordability is at a 30-year low, with only 13 per cent of Australians earning an average income able to afford to buy a property.
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00:00 What we've got out this morning is the new PropTrack Housing Affordability Index, which
00:06 measures affordability as the share of homes that everyone right across the income distribution
00:10 can afford. So it's a more comprehensive way of looking at affordability. Unfortunately,
00:15 the picture is not a good one at the moment. With the rapid increase in interest rates
00:18 that we've seen, it is much harder to afford to buy a home. And kind of the key underpinning
00:23 stat here, the sort of headline, if you like, is that for median income household across
00:28 Australia, so that's about $105,000 a year, only about 13% of homes sold in the past year
00:34 were affordable for that kind of income bracket to buy. That's pretty low. And that's much
00:39 lower than what we were seeing a couple years ago when interest rates were much lower. It's
00:43 the lowest we've got on our records. So in three decades, it's as low as we've seen.
00:48 And it really highlights the scale of the challenge households are facing at the moment.
00:52 Just give us an idea of how that is varied across the country, because obviously some
00:57 markets are a lot tighter than others. Yeah, that's right. New South Wales is and remains
01:03 and has for most of the last three decades been the least affordable state. It is obviously
01:08 a very expensive place to live. And while incomes are a little higher in New South Wales
01:12 than the average across Australia, it's not enough to compensate. And so New South Wales
01:17 is the most unaffordable state. Tassie, interestingly, is not far behind. So Tassie is the second
01:23 least affordable state at the moment. And that's a really big change for Tasmania. And
01:27 it's actually one of the things that I think sticks out most strikingly from the report.
01:32 As recently as 2016, Tasmania was actually Australia's most affordable state. And since
01:36 then, prices have basically doubled. So between 2015 and today, prices in Hobart have doubled.
01:42 And that's made Tassie, which is Australia's lowest income state, now its second least
01:46 affordable. Maybe to finish with a bit of a silver lining, the flip side is actually
01:51 WA, which is now Australia's most affordable state. Used to be the least. It's the only
01:56 time any state other than New South Wales has been the least affordable, which was back
02:00 in 2008, 9 and 10, during the height of the mining boom when WA got very, very expensive.
02:05 But since then, prices in WA have actually been relatively soft. And so today, housing
02:11 in WA is actually still relatively affordable compared to the rest of the country.
02:16 We notice as well, though, you mentioned, obviously, mortgage rates have increased quite
02:20 significantly in the last year or so. But we're still seeing property prices rise across
02:27 most markets. So what is the longer term outlook then for affordability?
02:32 Yeah, exactly right. You know, despite those big increases in interest rates, property
02:37 prices have been remarkably resilient this year. We had property prices out yesterday
02:41 for August. They're up 0.3 percent, according to the PropTrack Home Price Index nationally.
02:47 In Sydney, they're up 0.5 percent, which is fairly brisk growth, given kind of all of
02:51 the interest rate increases we've seen last year and the challenge of affordability. The
02:55 unfortunate news for homebuyers and for first homebuyers in particular is we're probably
03:00 not going to see a lot of relief on the affordability front anytime soon. Well, the good news is
03:05 that we're not probably going to see increases in interest rates from here. Or if we do,
03:09 they'll only be one or two, nothing like what we have seen. So it's not going to get worse,
03:14 but it's probably not going to get much better in the near term either. And with prices rising,
03:18 that's only going to make it a bit tougher. The offsetting bit here is that incomes and
03:23 wages are growing and they're growing quicker than what we have been seeing. But that's
03:27 going to be a slow process to offset that increase in mortgage costs.
03:30 [BLANK_AUDIO]