It’s getting better for those trying to buy a home. Housing affordability has improved over the year. The HIA-Commonwealth Bank
(ASX:CBA) Housing Affordability Index strengthened 2.2 per cent in the December quarter, 8.3 per cent above the level registered a year before. HIA’s senior economist Andrew Harvey says a decrease in mortgage lending rates and continued earnings growth offset the modest increase in median dwelling prices, further improving housing affordability. The affordability index tracks the relationship between household income and mortgage costs, taking into account the price of housing. Mr Harvey says it’s a good time to buy a new home for those who are financially able to do so. Housing affordability for the December quarter improved in all capital cities, except for Adelaide. Brisbane is now the most affordable capital city. The index shows that although housing affordability improved in Sydney by 3.5 per cent, it’s still the least affordable city in the country.
Meanwhile, the Urban Taskforce is calling for half a million new apartments to be built in Sydney. Chief executive Chris Johnson says Sydney is at a tipping point where the character of the city is evolving from a suburban model to a more urban model and younger people are preferring to live closer to work, transport and shops.
Turning now to the Melbourne rental market and the vacancy rates there are currently 2.4 per cent, pointing to the end of the rental shortage. The Real Estate Institute of Victoria says a vacancy rate of 3 per cent represents a balanced market where renters are generally able to find a home and investors receive a decent return. There’s a vacancy rate of 2.7 per cent for suburbs within 4 kilometres of the CBD. For suburbs 4 to 10 kilometres out, the rate is 2.6 per cent in February compared with 2.1 per cent in December. The middle suburbs have seen substantial easing from 1.2 to 2.2 per cent. But vacancies in the outer suburbs have tightened from 2.1 to 1.6 per cent.
