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Sydney mortgages require ‘two standard incomes’: HIA

Housing affordability levels in Sydney are “declining past a critical level”, with householders needing “more than two standard Sydney incomes” to service their home loans, the HIA has warned.

According to the Housing Industry Association’s (HIA) Affordability Index—which uses a range of data, including wages, house prices and borrowing costs to provide an indication of the affordability of housing—over the June 2017 quarter, housing affordability dropped by 0.3 per cent across Australia.

Affordability was greatly affected by a rise in median dwelling prices across the country, the data suggested, which rose by 9.1 per cent to a “record high” of $540,200 and outstripped the growth in wages. 

Further, NSW was found to have a “significant negative influence” on the overall result, with affordability dropping by 2.2. per cent. 

Sydney affordability also dropped by 0.7 per cent, leading the association to warn that “acquiring and servicing a mortgage on a house in Sydney now requires more than two standard Sydney incomes”. 

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The HIA said that Sydney is the only market to have achieved this outcome in the 15-year history of the report. 

The affordability findings back those from Roy Morgan Research, which found that Sydney currently holds the record for the highest outstanding mortgage levels, with the median home loan outstanding balance coming in at $293,000 (up 9.4 per cent in a year). 

While Roy Morgan Research found that Perth came second for outstanding mortgages (at $279,000 or 2.4 per cent increase), the HIA found that Perth had the highest deterioration levels for affordability, dropping at 1.3 per cent. 

Affordability in Melbourne improved marginally in the quarter, but remained 6.0 per cent less affordable than the prior corresponding period.

However, affordability improved in six of the eight capital cities. The largest improvement occurred in Darwin (4.3 per cent), followed by Adelaide (2.9 per cent), Hobart (1.6 per cent), Brisbane (1.0 per cent), Canberra (0.8 per cent) and Melbourne (0.8 per cent). 

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Perth also reportedly experienced a decrease in its average wages during the June quarter, and this has offset the positive effect of the drop in its housing prices.

 [Related: Perth market entering its recovery period]

Sydney mortgages require ‘two standard incomes’: HIA
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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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