Apparently, property buyers can borrow 15% more than they could 12 months ago.
Well that’s the opinion of a mortgage broker I know.
Others are saying that this uplift, assuming it is true, will be taken up by home buyers and will translate into 15% house price growth.
Meanwhile, the ratio of mortgage debt to household income has jumped to a record high of more than 140% according to the Reserve Bank. The RBA also says that total household debt to household income is now over 210%.
Hmmm.
Below is a housing affordability table that quite a few peeps have asked me to update.
Housing affordability – Australia capitals and Australia
| Capitals | House price | Current ratio | Affordable price | Difference | |
| Sydney | $866,500 | 6.7 | $702,750 | $163,750 | 19% |
| Melbourne | $709,000 | 6.0 | $637,750 | $71,250 | 10% |
| Brisbane | $533,250 | 4.9 | $584,250 | -$51,000 | -10% |
| Adelaide | $465,250 | 6.7 | $378,000 | $87,250 | 19% |
| Perth | $458,250 | 4.2 | $592,500 | -$134,250 | -29% |
| Darwin | $461,000 | 5.5 | $453,250 | $7,750 | 2% |
| Canberra | $657,000 | 5.4 | $654,250 | $2,750 | 0% |
| Hobart | $484,750 | 7.3 | $358,500 | $126,250 | 26% |
| Australia | $530,500 | 5.2 | $574,000 | -$43,500 | -8% |
| Matusik, CoreLogic + ABS. Median detached house price as at Mid-September 2019. Affordable price set at 5.5 times median household income. Matusik estimates. | |||||
There is much more to housing affordability than the measures outlined in this table.
For example, such results on a decade based timeline would suggest that the average Australian with a 25 year standard variable P+I mortgage has been paying, during the 2010s, in real terms, around 35% of their household income in repayments.
For those interested in such stuff, the same scenario as above, saw the following levels of real mortgage payments per decade:
- 1960s 7%
- 1970s 8%
- 1980s 19%
- 1990s 21%
- 2000s 19%
- 2010s 35%
Yet there is little doubt that housing affordability has improved over the last 12 months. Declining or stagnate prices and lower interest rates will do that.
I am not advocating the Perth or Brisbane are better places to buy nor am I saying that Hobart should be avoided. Also, I am not saying that house prices across Australia will rise, whether it is by 8% (as some may think the table above suggests) or by 15% as mentioned in the introduction.
This is just information. Some may use it to push their own barrows. My role in their stories is zilch. Big disclaimer et al.