According to the Housing Industry Association, affordability of housing is the best it has been in twenty years with mortgage repayments now consuming the lowest percentage of income since 1999. Softer housing markets and a decrease in interest rates coupled during the June Quarter to enhance affordability, while average earnings have started to enhance modestly.
“For an average earned home buyer buying a medium priced dwelling, assuming a 10 percent deposit, mortgage repayments will consume the lowest percentage of their earnings since 1999,” states Geordan Murray, senior economist at HIA.
“The primary reason today’s HIA Affordability Index is similar to the level in 1999, despite house prices growing considerably quicker than income, is that interest rates today are 4.6% compared to 6.7% in 1999.”
Murray claims the average income have risen by 113% over the last 20 years, while the average home cost has risen by 228%. But reduced interest rates imply that a loan has stayed the same cost of maintenance.