Housing affordability declines most in Melbourne in late 2016

31/01/2017

HOUSING affordability deteriorated the most in Melbourne of all capital cities at the end of last year, with rampant house price growth to blame.

This was the assessment of the Housing Industry Association’s latest ‘Affordability Report’, which found Victoria’s capital became 11.6 per cent less affordable in the December quarter.

In comparison, housing affordability fell 7.3 per cent both nationwide and in Australia’s priciest property market, Sydney.

The decline was 2.8 per cent in regional Victoria, and “a considerable” 13.5 per cent statewide, according to HIA.

But real estate agents say all hope shouldn’t be lost by househunters on a budget, with many suburbs still offering homes well under Melbourne’s ballooning median house price, which is now at a record $770,000, according to the Real Estate Institute of Victoria.

They may just need to look more than 20km from the CBD to find them.

The HIA research — which takes into account median dwelling prices, interest rates and the average earnings of a fulltime adult — found Melbourne had the second “most challenging” affordability conditions in the country, behind only Sydney.

More difficult affordability conditions in Melbourne have been driven by continued strong dwelling price growth,

the report said.

The report did note that the fact average earnings had risen by 4.1 per cent in the year to December — almost twice the national growth rate — had helped offset some of the effects.

HIA senior economist Shane Garrett said there was “no single solution” to improving affordability, but governments could employ key policy controls to provide some relief.

These included major reforms to reduce the “excessive cost” of new housing that addressed restrictive land supply, planning processes and the high taxation on new housing.

Housing affordability has managed to move in the wrong direction in many major cities despite the fact that interest rates are at very low levels

Hocking Stuart, Werribee and Melton, director Julian Conte said his patch in Melbourne’s outer west still offered affordability, plus “all the amenities a family needs”.

“The median price for a three-bedroom house in Melton is around $270,000. That’s a whopping $500,000 less than Melbourne’s median,” Mr Conte said.

“The same goes for Werribee, Hoppers Crossing and Tarneit.”

These property markets had benefited from the expansion of the Woodgrove Shopping Centre in Melton West, upgrades to roads, and the construction of more medical and education facilities, he said.

“Househunters are catching on to this, and we’re seeing plenty of people moving down the corridors from the inner west, including Williamstown, Altona and St Albans,” he said.

Mr Conte advised buyers seeking affordable housing to research thoroughly by scoping out as many properties within their budget as possible, and to have their finances approved as soon as possible so they were able make an offer if they fall in love with a home.

(Source: Samantha Landy. http://www.realestate.com.au/news/housing-affordability-declines-most-in-melbourne-in-late-2016-housing-industry-association/) 



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