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Housing Affordability

Where I live in Western Australia, there was a big upward push in housing prices while our State experienced a mining boom and associated growth in population. Now there is a housing boom in the most populous states of New South Wales and Victoria, and it’s causing concern.

House Prices Growing Faster than Income

There seems to be a disconnect between household income and mortgage costs:

Adam Schwab, company director and angel investor, and the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed. Published in Crikey, 2019-01-15:

According to the ABS, in 1997/98, the year the housing bubble started growing, equivalised household disposable income was 52,486 — an increase of 56%. While it was very difficult to get a perfect overlay, a Corelogic/Aussie Report showed that median house prices nationally rose from 571,000 since 1993 (a slightly longer period) — an increase of 414%.

Or put it another way: had house prices risen at the same level of income in the last 20 years, the median price across Australia would still be under $200,000.

Will This Correction Ease Stress?

Now we see reported a decline in housing prices reported. Good for buyers and new market entrants, but not so good for those who may now have negative equity and a mortgage to pay based on bubble prices.

Australia to see world's worst 2019 house price 2019-01-16:

In a research report released on Wednesday, Fitch Ratings forecast Australian house prices would decline a further 5 per cent this year, on top of a 6.7 per cent decline from the peak so far, making Australian housing the worst performer out of 24 countries for the second consecutive year.

See Also

housing_affordability.txt · Last modified: 2019/01/26 13:21 by admin