23 October 2007
Housing affordability in Australia has reached its lowest level on record following the latest interest rate rise, a survey shows.
The Commonwealth Bank of Australia-Housing Industry Association Quarterly Review of Housing Affordability for the September quarter showed the index falling 2.1% to be 8.3% lower than in the corresponding period in 2006.
The HIA says housing affordability has reached its lowest level since the series began in 1984. Established house prices rose by 11.4% during the past year and were a major cause of loan repayment rises for first-time home buyers.
First-home buyers earning an average household income of $98,000 a year would have to commit 31.7% of their income to buy a home, the highest on record.
HIA managing director Ron Silberberg called on the major political parties, now in election campaign mode, to establish home super saver accounts that would help first-home buyers save for a deposit.
"It is unacceptable that a typical first home buyer would have to place themselves in mortgage stress to purchase a home," Dr Silberberg said.
"Australians deserve to have a national housing policy which has as a core commitment to partner with state and local government in delivering solutions to the housing affordability crisis.”
In the September quarter, median first home prices rose by 1.7%. During this period, the Reserve Bank raised official interest rates by a quarter of a percentage point to 6.5%, the ninth successive climb since 2002.
The monthly loan repayment needed on a typical first-home mortgage rose to $2606 from $2506 to post a 4% increase. Mortgage repayments climbed by 0.7% in the September quarter, increasing the ratio as a proportion of household disposable income.
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