Housing further out of reach within city limits

The Australian 12:00am February 1, 2017

Elizabeth Redman

Housing affordability has deteriorated “sharply” to its worst level in four years, according to new figures from the Housing Industry Association, sparking fresh calls for different levels of government to work together on reducing the cost of new dwellings.

Affordability worsened by 7.3 per cent across Australia in the three months to December 2016, with conditions most challenging in Sydney and six of the eight capital cities becoming less affordable, HIA said.

Someone on an average income with a mortgage for an average dwelling would be spending 39 per cent of their earnings on mortgage repayments, as of the December quarter, the association found.

The rise in dwelling prices over the past year was largely to blame, with slow earnings growth not helping, even though these factors were somewhat offset by low interest rates. Sydney, Melbourne and Canberra were the next least affordable. Hobart is the most affordable capital, figures show.

HIA senior economist Shane Garrett noted the difference in affordability between different parts of Australia, calling Sydney and Melbourne “very challenging”, but pointed to more accessible areas such as Tasmania and regional areas of Western Australia, South Australia and the Northern Territory.

The data follows Deputy Prime Minister Barnaby Joyce’s comments last week that “houses are much cheaper in Tamworth” than in Sydney.

NSW Premier Gladys Berejiklian last week emphasised the importance of tackling housing affordability in the state, but put her focus on the question of increasing supply.

Another solution could be to reduce the cost of producing new homes, suggested the HIA, the peak body for the residential building industry.