The ABC’s finance expert Alan Kohler has described the housing affordability crisis as Australia’s worst ever financial mistake.
The situation is now so bad that a median-priced house is unattainable for a single, average-income earner, even in the seemingly more affordable capital cities where house prices are much lower than Sydney, Melbourne or Brisbane.
Adelaide is surprisingly Australia’s second least affordable state capital city when the average, full-time salary in South Australia was compared with the city’s median property price.
In January, the median price for houses and units in Adelaide was $721,376, which is 7.9 times higher than the average full-time salary in South Australia, standing at $91,068.
This was well above Australia’s national debt-to-income ratio of 7.5.
‘There are a couple of things that might surprise you: Adelaide became the second, least affordable Australian city last year,’ Mr Kohler explained.
‘Adelaide has just taken over from Hobart in second place.
‘What’s going on: put simply, incomes in Adelaide, Hobart and Brisbane are not keeping up with house prices, which are being pushed up by fast-rising population and by first-home buyers.’
Mr Kohler noted that when he and his wife bought their first home in Melbourne for $40,000 in 1980, he was earning $11,500 as a journalist.
This meant his home cost just 3.5 times his income before a mortgage deposit.
‘When my wife and I bought our first house in 1980, the average house price was 3.5 times average income,’ he said. ‘Now, it’s 7.5 times and rising.
‘That didn’t have to happen: it’s Australia’s worst, economic mistake.’
The ABC’s finance expert Alan Kohler has described the housing affordability crisis as Australia’s worst ever financial mistake
The Reserve Bank in November raised interest rates for the 13th time in 18 months, taking the cash rate to a 12-year high of 4.35 per cent, has also diluted what banks can lend.
Borrowers would now be unlikely to be able to borrow more than five times their salary, locking younger, single buyers out of the market unless they had help from their parents.
Mr Kohler said parents were now propping up the mortgage deposits of first-home buyers, effectively bringing forward their inheritance causing the value of loans to them to surge by 21 per cent in 2023.
‘Despite rising prices and crushing interest rates, first-home buyers were the fastest-growing type of borrower,’ he said.
‘The Bank of Mum and Dad coughing up early inheritances and politicians showering them with grants and concessions, desperate to appear to be doing something about affordability while actually making it worse.’
Along with high interest rates – record-high immigration is pushing up houses prices and worsening the rental market.
Australia’s median property price of $759,437 in January was 7.6 times the national, average full-time of $99,174, with bonuses and overtime included.
Sydney is the world’s most expensive property market, after Hong, when property prices were compared with income.
The city’s median house and unit price of $1.122million in January was 11.3 times the average, full-time salary of $98,675 in NSW.
The situation is now so bad that a median-priced house is unattainable for a single, average-income earner, even in the seemingly more affordable capital cities where house prices are much lower than Sydney , Melbourne or Brisbane (pictured are young voters)
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