Housing affordability in Australia’s capital cities has further deteriorated, new data has revealed.
The Housing Industry Association (HIA) Housing Affordability Index shows affordability for home buyers dropped 4.3% across the county’s eight capital city housing markets in the June 2016 quarter. Affordability levels are now tracking at the same level as the end of 2015 after seeing a minor improvement in the March 2016 quarter.
Housing affordability across Australia’s regional markets improved by 1.9% over the June quarter. Overall affordability – capital and regional markets combined – fell by 3.7% to be 2.1% less affordable than the same period a year earlier.
However, while there was a decline in the headline index tracking the national picture, HIA economist, Geordan Murray, said there was “substantial variation” around the country.
“The geographic variation in affordability is most evident in the comparison between Melbourne and
Perth,” Murray said.
“Over the last year, the median dwelling price in Perth has fallen by 4.7% while Melbourne’s has grown by 11.5%. This has seen the affordability index for Perth increase by 6.2% over the last year, while the index for Melbourne has fallen by 6.2%.”
But these differences in affordability align with the relative economic performance of these two states, Murray explained.
“The Western Australian economy is navigating the tail end of the mining boom which has seen conditions in the local labour market deteriorate and consequently the rate of population growth has fallen quite sharply.
“In contrast, Victoria has experienced a healthy level of growth in the labour force and continues to record the strongest rate of population growth in the country.”
During the June 2016 quarter, improvements in affordability were recorded in three capital cities with the largest improvement in Perth (3.2%), followed by Darwin (2.9%) and Hobart (2.2%).
Affordability worsened in the remaining five capital, with the largest decline recorded in Melbourne (-7.4%), followed by Canberra (-5.7%), Sydney (-1.6%), Adelaide (-1.3%), and Brisbane (-1%).
According to data from CoreLogic, Sydney is still home to the highest median house price, recording a median price of $780,000 in June, followed by Melbourne at $587,500.
At June, Perth had a median house price of $505,000 whilst Hobart had the lowest median house price, at $341,500.