House prices beyond buyers' reach
Australian house prices have become severely unaffordable in the last 10 years, with predictions stating it will take another 10 years of flat house prices and increasing incomes to bridge the gap.
The latest AMP.NATSEM Income and Wealth report has found that from 2001 to 2011, housing prices have gone from affordable to severely unaffordable across the nation.
Over this time, the median house price increased 147 per cent to $417,000, while median after-tax income increased just 50 per cent to $57,000, pushing up the price to income ratio.
The report looks at two factors of affordability: housing stress based on the proportion of income spent on housing costs like mortgage and rent, and the house price to household income ratio.
It was little surprise that Sydney topped the list of the most expensive place to buy, with a median price of $510,000 – as well as being the least affordable capital city in Australia.
More surprising was the fact that 15 of the 17 major non-capital cities are now unaffordable, making it more difficult for people in places like Newcastle, Wollongong, Mandurah, the Gold Coast and the Sunshine Coast to buy a house.
AMP Financial Services managing director Craig Meller said Australians have not been deterred from buying a house, despite increasing stresses and decreasing affordability.
“Some are downsizing or saving for longer, others are making sacrifices. In doing so, people are looking to secure their financial futures by holding tight to the Australian dream – to be a home owner,” Meller said.
The cheapest city to buy was Hobart with a median price of $326,000, while the most affordable city was Darwin, with houses at just six times the median income as opposed to Sydney’s 8.4 times.
Recommended for you
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
Australia has marked a decade among the best countries for retirement, according to Natixis, but with high inflation threatening their retirement goals, a third say they would get professional advice to improve their chances.
When it comes to the risks of acting as a responsible manager at an AFSL, compliance firm Holley Nethercote has shared a range of red flags that could see them facing disciplinary action from the corporate regulator.
Wealth management platform provider Netwealth has announced a partnership with FinClear to streamline trading capabilities for advisers.
