The Housing Industry Association (HIA) has recently released its Housing Affordability Index for the June quarter of 2020. The latest figures indicate that Australian housing prices are the most affordable that they’ve been since 1999. This is incredibly significant because it shows that now is the perfect time for first home buyers to get their foot in the door of the housing market.
When calculating the Affordability Index, HIA factors in all eight of the country’s capital cities and regional areas on a quarterly basis, as well as the most recent dwelling prices, mortgage interest rates and wage developments. Overall, the HIA found the housing affordability has improved across all capital cities in the June 2020 quarter.
Additionally, the latest Affordability Index indicates that nowadays, in order to service a mortgage on a median-priced dwelling in any of Australia’s capital cities, less than 1.2 average incomes are required. This is a significant improvement when compared to three years ago when 1.4 times the average income was required to service the same mortgage.
The result of this improvement means that there is no better time than the present for first home buyers to take the leap and purchase a property, or for experienced home buyers to expand their portfolio.
However, according to HIA’s Chief Economist, Tim Reardon, due to increases in red tape, the challenge for many new home buyers is not the price of homes, but obtaining a mortgage in the first place. Increased lending restriction following 2007 Global Financial Crisis has meant that it is far more difficult for first time home buyers to obtain a mortgage than those who already own a home.
Mr Reardon suggested that the solution could come in the form of improving access to finance for first time home buyers. Just like this was able to help pull the Australian economy out of the 1990s recession, a similar move could help the nation during the COVID-19 recession.
In addition to home prices being at their lowest in several decades, there are several reasons why there is no time like the present to invest in a home. This includes:
A recent fall in building activity means that builders will not only be more available, but will also likely offer discounts and specials Currently, building approval rates are incredibly low which means you don’t have to wait very long to start constructing your dream home The Government’s HomeBuilder scheme can mean that you are eligible for a grant of up to $25,000 to construct a new home or significantly renovate a pre-existing one