“Easing house price pressures are providing some affordability relief for home buyers,” commented Diwa Hopkins, HIA Economist.
Some Relief for Home Buyers
In the June 2018 quarter the HIA Affordability Index registered 74.9, up by 0.4 per cent over the quarter and up by 0.8 per cent compared with a year earlier when affordability had reached its poorest level in nearly six years. “Previous strong price increases were met by an unprecedented level of building, which is now starting to come online,” said Ms Hopkins.
“This is providing much-needed additional supply in key markets, helping to reduce price pressures and ultimately improve affordability for home buyers.”
The June 2018 edition of the HIA Affordability Report also includes analysis of dwelling prices in relation to rents to assess the degree of balance in housing supply and demand in the capital cities and how this has evolved over recent months. The balance or otherwise of a housing market is a fundamental driver of dwelling prices and consequently affordability.
“Most markets are evenly balanced,” said Ms Hopkins.
“In Sydney and Melbourne in particular, while dwelling prices are coming off the boil, rental price increases have been steady. This suggests the overall supply of housing is well matched with demand.
“With an even balance in overall housing supply and demand in these key markets, the current downturn in dwelling prices is unlikely to be prolonged or severe.
“We could expect this downturn in prices to play out like previous cycles. They typically last 12 to 18 months, with the size of the fall modest relative to the immediately preceding expansion.
“In the meantime declining prices will continue to drive improvements in affordability particularly in the Sydney and Melbourne markets,” concluded Diwa Hopkins.
[colored_box color=”yellow”]For further information please contact Diwa Hopkins, Economist 02 6245 1366 Shane Garrett, Senior Economist 0450 783 603 [/colored_box]