The dream of owning your own home remains out of reach for a growing number of Australians. Despite falling house prices, the latest quarterly survey released by the Real Estate Institute of Australia today shows a continuing decline in housing affordability.
LEIGH SALES, PRESENTER: The dream of owning your own home is out of reach for a growing number of Australians.
The Real Estate Institute of Australia released its quarterly survey today, and it shows housing affordability is still getting worse.
That’s even with falling house prices and government help for first-home buyers.
As Peter McCutcheon explains, it’s because wages in Australia aren’t rising and that means a lot of people find it hard to get a loan.
PETER MCCUTCHEON, REPORTER: House prices in the big cities are falling. Buyers’ hopes are rising but the reality is sobering.
MEGAN REINWALD: People are talking about prices falling but it does seem like mission impossible if you want to buy a house, to have to save a 20 per cent deposit.
KAREN STERN: And then when the banks won’t finance it, you’re like, “What do I do? Win Lotto?”
PETER MCCUTCHEON: Karen and Roger Stern are frustrated.
They want to move out of their cramped high-rise unit in Sydney’s south-east.
KAREN STERN: It’s quite small now with an 18-month-old.
We’d really like some more space and probably a backyard for Zachary as well.
PETER MCCUTCHEON: Falling house prices aren’t making the job any easier.
KAREN STERN: It’s pretty much a paper exercise, because our property then goes down and house prices go down. So it’s really the same as when our property was worth more and houses were more. It’s really the same.
PETER MCCUTCHEON: The Sterns don’t want to move away from this part of Sydney because both Roger’s work and Karen’s mother’s nursing home are nearby, but they can’t get a big enough loan to afford a house in
ROGER STERN: For us, you’ve got a limit and that’s it.
You find the right place and you go, great, and then you miss out.
KAREN STERN: I don’t think it’s unreasonable what we’re looking for.
I think what’s unreasonable is the banks, just won’t finance — won’t give you the finance to allow you to grow, I guess.
PETER MCCUTCHEON: A crackdown on high-risk lending in the wake of the Royal Commission into the banking sector, has arguably made it harder for some home-seekers.
ADRIAN KELLY, REAL ESTATE INSTITUTE OF AUSTRALIA: From what our members tell us – and these are the ordinary real estate agents who are working out there on the street – they are telling us, that loans have been rejected whereas 12 months ago, those same sorts of buyers wouldn’t have been.
PETER MCCUTCHEON: But there are other obstacles as well.
PROFESSOR CHRIS LEISHMAN, HOUSING ECONOMIST: Existing home owners tend to delay the selling.
In a flat market or falling markets, and they wait until prices are rising again. Then they sell and trade to new property.
So, there simply isn’t that many opportunities to buy for aspiring home owners at the moment.
PETER MCCUTCHEON: The Sterns have one income.
Roger works in the automotive industry and wages aren’t keeping up with the cost of living.
KAREN STERN: It’s a huge concern because the ability to make more money, to be able to spend more money.
It’s like there’s a freeze on what you can earn but, yet, everything else is going up.
PETER MCCUTCHEON: Figures released today by the Real Estate Institute of Australia, show a continuing decline in housing affordability over the last quarter.
And nearly a six per cent drop in first-home buyers over the year.
ADRIAN KELLY: It’s still very difficult for first-home buyers to access the market, largely because A: they need to find a sizable deposit which needs to be paid up-front — they generally need to pay government stamp duty as well, which also needs to be paid up-front, and a lot of those first-home buyers also need to access some sort of mortgage insurance.
And it’s very difficult for them to access all of that large amount of money at the one time.
PETER MCCUTCHEON: And there’s no sign in the coming years, that the proportion of average income to house prices will drop.
PROFESSOR CHRIS LEISHMAN: If you look at long time periods, they tend to go up and up persistently in the long run.
So, you get a small correction but overall trend is upwards.
PETER MCCUTCHEON: Professor Chris Leishman and his team have forecast the number of households, that will need housing or rental assistance in the coming years and it’s bad news for the most popular states.
In New South Wales, the number is predicted to jump nearly 80 per cent over an eight-year period to just under 700,000 by 2025.
The rate of increase is slightly lower in Victoria, but still pushing the half a million mark over the same time period.
While housing need in Queensland and the rest of Australia remains relatively stable.
PROFESSOR CHRIS LEISHMAN: There’s a worry actually, that Australia’s largest cities have become too large.
There’s an ongoing research program looking at this very issue actually.
Has the affordability of housing and the congestion of larger cities — is it now undermining economic growth?
MEGAN REINWALD: Compared to my parents and grandparents, they still had to save a deposit to be able to buy a home but as proportion of their income, it was much less.
And today, you need two high incomes to be able to pay back a mortgage.
PETER MCCUTCHEON: Local government worker, Megan Reinwald is starting to save for a deposit, but she finds Melbourne’s house prices horrifying.
MEGEN REINWALD: It does seem like prices are falling, because everyone’s talking about it on the news.
But still, a one-bedroom apartment with a garage as well, would be 800,000 and that’s definitely not possible for me to afford.
PETER MCCUTCHEON: There is some good news. A possible window of opportunity when the economy picks up.
And that’s what the Sterns are counting on.
ROGER STERN: When, I guess the economy gets a bit better and then we maybe, you know, will have a
But at the moment it’s very, everything is very tight for everyone.
PROFESSOR CHRIS LEISHMAN: So there may be an opportunity, perhaps in a year or 18 months, like a pause in the market, where it’s actually more accessible for aspiring home owners.
But then unfortunately, the price growth is likely to continue into the long run.
KAREN STERN: I think, if we can’t find an affordable house at the moment nearby, then we just got to stay put in our unit and just be very cosy.
LEIGH SALES: And if you’re having a tough time as a home buyer or seller and would like to share your experience, drop us a line at 7.30[at]abc.net.au