Houses in Australia are still unaffordable despite a record fall in real estate values.
Moody’s Investors Service, a global credit ratings agency, calculated that home borrowers in Sydney were still paying 33 per cent of their household income on monthly mortgage repayments.
Economists and the Reserve Bank of Australia generally define mortgage stress as a situation where borrowers are paying a third or more of their after-tax income on home loan repayments.
Houses in Australia are still unaffordable despite a record fall in real estate values (Sydney’s Bondi Beach pictured)
During the past year alone, Sydney’s median house and apartment prices have dived by 10.9 per cent, CoreLogic data showed.
House prices have dived by a record 16.1 per, or $169,146, since peaking in July 2017.
A year ago, a Sydney mortgage swallowed up an average 37.9 per cent of a household’s take-home pay.
Now, a typical mortgage in Australia’s biggest city consumes 33.2 per cent of a borrower’s income, as of March 2019.
Moody’s Investors Service, a global credit ratings agency, calculated that home borrowers in Sydney were still paying 33 per cent of their household income on monthly mortgage repayments (stock image)
Sydney, already Australia’s most expensive housing market, had the biggest improvement in housing affordability, even though the median house price of $880,594 is still more than 10 times an average full-time salary of $83,500.
In Melbourne, the proportion of take-home pay required to service a home loan fell from 31.6 per cent to 29.4 per cent, even though house and unit prices have dropped by 9.8 per cent during the past year.
In Brisbane, where median house prices are a more affordable $538,544, home loans typically consumed 22.5 per cent of take-home pay, compared with 23.8 per cent of disposable household income year earlier.
Perth was Australia’s most affordable capital city, with mortgage repayments taking up just 19.4 per cent of household income, although this was only a slight improvement on 19.7 per cent a year ago.
In Adelaide, the proportion of household income needed to meet mortgage repayments increased moderately from 21.8 per cent to to 23.1 per cent over the same time frame, as median house prices rose by 0.7 per cent.
Across Australia, mortgage repayments consumed 26.5 per cent of take-home pay in March 2019, compared with 28.7 per cent a year earlier.
A typical mortgage in Sydney (pictured) consumes 33.2 per cent of a borrower’s income, as of March 2019. A year ago, a Sydney mortgage swallowed up an average 37.9 per cent of a household’s take-home pay
Moody’s senior analyst Alena Chen said housing affordability was likely to improve during the next year.
‘Housing affordability for new mortgage borrowers in Australia, which improved over the year to March 2019, will continue to improve over the next 12 months, because of declining housing prices,’ she said.
‘More affordable housing reduces the credit risks of newly originate mortgages.’
Moody’s Analytics, another independent arm of the global credit ratings agency, last week predicting house prices at Ryde, in Sydney’s north, would plunge by 15.8 per cent in 2019 alone.
It also predicted median house prices in Melbourne’s inner-east to plunge by 16.3 per cent.
Moody’s Analytics, another independent arm of the global credit ratings agency, last week predicting house prices at Ryde, in Sydney’s north, would plunge by 15.8 per cent in 2019 alone
It also predicted median house prices in Melbourne’s inner-east to plunge by 16.3 per cent