The cyclical improvement in housing affordability continued in the June 2013 quarter, said the Housing Industry Association, the voice of Australia’s residential building industry.
The HIA-Commonwealth Bank Housing Affordability Index increased by 4.4 per cent in the June 2013 quarter to a level of 72.8.
“A synchronised increase across the capital cities and non-metro areas drove the further improvement in the June 2013 quarter. Housing affordability in Australia is now 16.7 per cent higher than in mid-2012,” said HIA Chief Economist, Dr Harley Dale.
“These are certainly encouraging results for those entering the market at this time in the cycle,” commented Harley Dale.
“The considerable reduction in interest rates is more than offsetting recent dwelling price increases,” said Harley Dale. “Current improvements in housing affordability do not represent structural shifts in Australia’s affordability; rather, they represent the dominant impact of cyclical changes in lending rates which will of course be prone to reversal at some point.”
“Genuine, structural improvements to affordability are contingent on a stock of housing supply that grows commensurately with the population and its housing needs,” noted Harley Dale. “Policy reform, led by the Federal Government, needs to be implemented to drive a sustained improvement to residential construction so as to genuinely address the housing affordability challenge in Australia.”
In the June 2013 quarter the HIA-CBA Housing Affordability Index increased in all seven capital cities reported. The strongest quarterly increase occurred for Brisbane with a rise of 10.4 per cent, followed by Hobart (10.0 per cent), Adelaide (7.7 per cent), Canberra and Perth (4.1 per cent), Sydney (3.3 per cent), and Melbourne (2.2 per cent).
Outside of the capital cities, affordability improved in the June 2013 quarter in all six non-metro regions reported. The strongest quarterly increase was for regional Queensland with a rise of 9.6 per cent, followed by the non-metro areas of Tasmania (8.1 per cent), South Australia (7.7 per cent), Victoria (5.3 per cent), Western Australia (4.5 per cent), and New South Wales (2.9 per cent).
Given the importance of adequate new housing supply coming online to avoid unnecessarily strong pressure on existing dwelling prices, the HIA-CBA Affordability Report is now tracking new detached house prices relative to established detached house prices. This provides an indication of the affordability of new houses relative to established houses and consequently the progress different markets are making in addressing overall housing affordability.
“A relative new house affordability advantage has emerged for Sydney and Western Australia in recent quarters. These are the areas of Australia where, not coincidentally, a clear new home building recovery is underway,” added Harley Dale.
My own ambitions have failed to secure me a permanent home before illness struck and I had to draw my minimal super, which I would not have coped without. Each time my rental has expired, for whatever reason the landlord saw fit (twice now it has been major renovations) it has taken longer in the wilderness of searching for another, so that in the past six years I have spent altogether an entire year displaced and distressed. I have a disability pension and pay over half my income on rent, even now with little territory of my own, and was on the emergency housing list for three years; quite a short time by general standards. I still have my pride, hopes of something better, and know there are some decent places in the housing stock, but many are not 'decent'. I have turned down three offers from them, two because they were simply untenable, entirely unsuitable to my needs - one a significant distance from my health and social networks, one little more than a living coffin, another right next door to someone who would have been the neighbour from hell. They accepted two of my rejections as viable, but not the last so I have one offer remaining. In the meantime I took a share-house rental and could not have managed moving again so took myself off the emergency list. But at 64 with no resources beyond creativity and no prospects other than the whims of fortune, no doubt I will be back on it and likely to be not as choosey. As the babyboomers hit this wall, politicians, being pragmatic, will soon realise there are votes in social housing and I think we will see more action on this issue. As ever, the Greens are more progressive and I like their ideas on government bond-financed housing. I would hope that there will be more consideration for the generational needs of the demographic it will serve.
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