AIP Housing Affordability Index for March quarter, 2019

Embargoed until midnight July 5, 2019

The AIP housing affordability index shows an increase in repayment affordability of 9.64% in Sydney and 10.02% in Melbourne in the March quarter.

(To download the report click here).

This goes some way to explaining recent reports of a rebound in house prices.       

These are the best improvements, with the Australian average being a 4.78% average.

There were decreases in repayment affordability in Hobart and Perth, while Brisbane and Adelaide had small increases, and Canberra and Darwin, larger ones.

“Over March, the cost of servicing a mortgage on the average house dropped by almost 5% across the country, with the biggest drops in our two largest cities,” said AIP Executive Director Graham Young.

Mr Young said that the most historically affordable markets by repayments were Brisbane, Darwin and Perth, where repayments were similar to the average of the late nineties and early 2000s.

The least affordable by repayments were Canberra, Melbourne and Hobart which were 25 to 40% more expensive than they were in the late nineties, early 2000s.

Deposits continue to be the stumbling block with a deposit on average 49.4% more expensive than it was 15 to 25 years ago.

“The historically high cost of a deposit reflects that fact that interest rate decreases have boosted housing prices by enabling buyers to bid higher, but at affordable repayment levels.

“That explains the anecdotal evidence of the “Bank of Mum and Dad” funding a lot of first home buyers. House repayments aren't a problem, but saving a deposit is.

“It also suggests that house prices will experience another spike because of the most recent RBA rate cut. On the repayment relativities between cities, this is likely to have the biggest effect on Sydney and Melbourne.”

For further information contact Graham Young 0411 104 801.