And now for the good news: first homes more affordable than ever
Tuesday, 4 February 2014 12:00 AM
Home ownership is the most common and most desired form of housing in Australia. For those ineligible to obtain a traditional style of mortgage home ownership assistance programs are proving to be very successful. However the key to these successes is a stable or rising property market.
So despite the mass media reporting regularly that the Great Australian Dream of home ownership is dead, that first home owners are squeezed out of the market and will forever reside in the world of private rental - surprisingly all the available facts show otherwise.
What is the current state of housing affordability? Some of the most reliable property indexes say affordability is at its best in a decade. In November the Commonwealth Bank quarterly index and the Housing Industry Association index showed even more improvement in the September quarter – this was across all the capital cities.
Canstar, the financial rating firm, proved that although the national average mortgage is 4.5 times bigger than in 1990, ironically affordability is better today. Why? Because interest rates are lower and wages higher, so repayments as a proportion of weekly income are lower than they were in 1990.
The Australian Bureau of Statistics found that average house prices, relative to a home owners average income is today at the same level as 1995. The Adelaide Bank and the Real Estate Institute of Australia basically concurs with the Commonwealth Bank report. It seems the Great Australian Dream is not only still alive, it is thriving.