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Good news for Sydney as affordability improves? Maybe not....

Discussion in 'Real Estate' started by Jacque, 19th Jan, 2006.

  1. Jacque

    Jacque Team InvestEd

    Joined:
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    Sydney
    It looks like the news for first homebuyers might be improving if this recent press release is anything to go by.........

    Figures from the recent HIA/CBA Affordability Report show that affordability improved in the December quarter, up 5.4% to its highest level in more than a year.

    HIA’s Executive Director of Housing and Economics, Mr Simon Tennent, said that according to Commonwealth Bank figures, prices fell by 3.4% in capital cities and were basically flat in regional Australia with only a small fall of 0.6%.

    “This easing in house prices at a time when interest rates are on hold and incomes are creeping up has lowered the affordability hurdle for some home buyers but there is still a long way to go,” he said.

    “For all of Australia, the median first-home buyer price eased by 4.2% to $327,400 in the December quarter, with typical first-home repayments falling from $1,986 to $1,902.

    “It is highly likely that the worst of the affordability crisis has passed as the favourable combination of stable interest rates, higher incomes and soft house prices will most likely continue throughout 2006.

    “But despite these positives, there is little chance that affordability will return to the favourable levels last seen in the late 1990’s where on average, home buyers entering the market needed to commit 18% of their take home pay towards mortgage payments. Currently, homebuyers need to put aside 28% of their income".

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    28% is still a fair portion, though I'm sure there are many many homeowners out there who are committed much more than this in the current market. Perhaps our resident brokers would care to comment on this?
    At least we're not in the awful days of 18% interest rates!!
     
  2. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Location:
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    Jacque,

    Spot on. 28% is still way too high.

    Lets have a look:

    http://wopared.parl.net/library/pubs/mesi/mesi54.htm

    Nope, still way too unaffordable. So long as prices stay this high and wage rises only creep up then we're a long way off affordability coming back to levels that will allow another jump in housing prices. Its a long term game. We're years of slow economic growth and stagnant house prices away from the clock turning back to "recovery" again. But the media will keep printing any anecdotal tidbit they can find to try and make something out of what is a lacklustre property market.

    Back to the sidelines for another year or five...

    Michael.
     
  3. Jacque

    Jacque Team InvestEd

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    Location:
    Sydney
    I tend to agree Michael, but taking into account that the market peaked over two years ago now (Sep/Oct 03) I would think that another 2-3 yrs is more likely before we start seeing signs of a recovery. Then again, who amongst us possesses that magic crystal ball? :)