Property Ownership Still The Dream
Following two years of declines in house prices nationally, consumer attitudes to housing affordability have improved. Slightly more than half of Australians think affordability is better relative to a year ago, and almost half think it will be still more affordable in a year’s time.
However, according to CoreLogic’s Housing Affordability Report 2019, some 83 per cent of non-property owners are still concerned about being able to afford their first home.
The ratio of dwelling values to household incomes remains elevated, tracking 6.5 times higher than household incomes. While that has declined from 6.9 times in mid-2017, it’s still significantly higher than back in the early 2,000’s. Despite the lowest mortgage interest rates on record, consistently low-income growth is adding to affordability pressures.
The report identifies some key trends:
1. Millennials are keeping the ownership dream alive - Some 81 per cent of Australians believe home ownership is important (down from 89%
in the 2017 survey). Younger generations, who struggle with housing affordability the most, are feeling the most passionate; 86% of Millennials rate home ownership as important.
2. Australians are finding it hard to secure a loan – Loan approval is the second biggest obstacle to home ownership. The tightening of credit availability following the Banking Royal Commission means there is now much greater focus on a borrower’s expenses.
3. ‘Cubby House Syndrome’ is worsening – Children are staying at home longer, with most saying they’ll be 30 before they can afford to move out.
4. Housing costs remains high – Despite the lowest mortgage rates since the 1950s, it still takes more than 35 per cent of annual income to service a mortgage.
5. Australians want stamp duty addressed – 79 per cent of survey respondents believe removing stamp duty would greatly improve affordability.