Following a 1.3% rise in house prices, the HIA/Commonwealth Bank housing affordability index has fallen 0.6% in March to the lowest levels ever recorded by the index, first introduced 23 years ago.
“The housing affordability crisis shows all the signs of structural supply constraints; it is not part of some market cyclical trend that will correct itself,” HIA managing director Ron Silberberg said.
As much as 30.7% of of a first home buyers disposable income is now spent on mortgage repayments.
Meanwhile the Sydney Morning Herald reports the average monthly repayment to service an average first home in Sydney has reached $3000 a month ($36,000 a year). These figures are assuming a loan of 80% of the value of the property, but in many cases today, first home buyers seek mortgages totaling 100% or even more.
With affordability plummeting in recent years, many households are under increasing financial stress.
Mr Gallagher, the Insolvency and Trustee Service Australia’s inspector general, said in a recent testimony to a Senate committee that bankruptcies have risen 12.5 per cent in the nine months to March
» Home affordability hits record low – The Australian, May 29th 2007.
» First home payments hit $3000 per month – Sydney Morning Herald, May 30th 2007.