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According to the recently released HIA Affordability Report, there are considerable affordability variations between states, and also differences between capital city markets and regional markets.
This is most evident in the comparison between Melbourne and Perth.
“Over the last year, the median dwelling price in Perth has fallen by 4.7 per cent, while Melbourne’s has grown by 11.5 per cent. This has seen the affordability index for Perth increase by 6.2 per cent over the last year, while the index for Melbourne has fallen by 6.2 per cent,” said HIA economist Geordan Murray.
These results align with the relative economic performance of these two states.
“The Western Australian economy is navigating the tail-end of the mining boom, which has seen conditions in the local labour market deteriorate, and consequently the rate of population growth has fallen quite sharply,” said Mr Murray.
“In contrast, Victoria has experienced a healthy level of growth in the labour force and continues to record the strongest rate of population growth in the country.”
Overall, the index shows an easing in affordability for home buyers, falling 3.7 per cent during the June 2016 quarter and 2.1 per cent against the same period last year.
The capital city housing affordability index fell 4.3 per cent during the quarter, while the regional market index experienced a 1.9 per cent improvement.
“Home price growth moderated in the early part of the year and the HIA Housing Affordability Index showed an improvement in affordability during the March 2016 quarter,” Mr Murray said.
“However, in the June quarter dwelling price growth returned and the index reverted to the level we saw at the end of 2015.”
During the June 2016 quarter, improvements in affordability were observed in three capital cities, Perth (+3.2 per cent), Darwin (+2.9 per cent) and Hobart (+2.2 per cent).
The largest decline was recorded in Melbourne (-7.4 per cent), followed by Canberra (-5.7 per cent), Sydney (-1.6 per cent), Adelaide (-1.3 per cent), and Brisbane (-1.0 per cent).