Higher interest rates and resilient house prices have dampened housing affordability for Perth's first-home buyers.
Figures released today from the HIA/Commonwealth Bank Affordability Report show that affordability deteriorated again in the June 2006 quarter, dropping by 9 per cent to be 18.8 per cent lower than June last year. With the latest increase in interest rates, affordability would have taken a further hit.
Perth's first-home buyers entering the market would have to commit 28.8 per cent of their income towards mortgage payments which is getting even closer to the 'no-go zone.'
Western Australia's peak building industry body, HIA, said that with house prices holding up, the first of two rate rises this year did little more than push home-ownership further out of reach for many families locked into the tightening rental market.
HIA's Executive Director of Western Australia, Mr John Dastlik, said that the long awaited and much needed improvement in housing affordability looks to be some time off.
"The long held relationship between higher interest rates and falling house prices is unlikely to hold true in this coming cycle," Mr Dastlik said.
"With the need for new housing sitting at close to 160,000 homes per annum nationally, spiralling land costs, crippling fees and charges, and planning red tape have made it impossible for the industry to get close to underlying demand in each of the past three
years. It therefore comes as no surprise that house prices and rents keep rising, with the real irony being that both factors were significant contributors to measured inflation in the June quarter," he said.
"With every likelihood that affordability will decline further in coming quarters, the need for an urgent and radical re-think on new housing supply has never been greater."
