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- In short: A report by real estate analysts PropTrack says servicing a mortgage is "close to as hard as it has ever been", with a household earning average income "would need to spend a third of their income on mortgage repayments to buy a median-priced home"
- What's next? PropTrack economist Paul Ryan says it's likely property prices will continue to increase over the next six to 12 months
Housing affordability is now at its worst level in at least three decades, driven by the sharp rise in mortgage rates and increasing home prices, a new report has found.
The data comes from PropTrack, the analytics division of REA Group, which analysed affordability and accessibility across different household income distributions, locations, and ages.
People looking to buy a house in New South Wales, Victoria or Tasmania will have the toughest time finding something in their price bracket.
A typical-income household could only afford 5 per cent of homes sold in Tasmania in the past year — the lowest in the country.
First home buyers and lower-income households are finding it particularly challenging.
"We've got a situation where first home buyers are having strains on affordability in terms of repaying mortgages, as well as a difficulty saving a deposit 20 per cent of the home price," PropTrack economist Paul Ryan said.
Mr Ryan noted that for Tasmanian families in particular, mortgage repayments account for 35 per cent of household income — a record high.
"We are seeing that [in] Tasmania, while home prices have increased significantly and are quite close to prices in Victoria now, incomes have been lagging behind."
"That's the thing that's made Tasmania record lower housing affordability than every state except New South Wales [in the past]."
It's also taking people longer to save for a deposit, with the report finding the average Australian household would need to save 20 per cent of their income for more than five and a half years to buy a median-priced home.
"At the same time, high [property] prices mean that saving for a deposit is harder than ever before," said Mr Ryan.
"It's definitely a really tough period for new home buyers and first-time buyers in particular."
But it's not all bad news, particularly for people house hunting in Western Australia and Queensland.
In WA, 22 per cent of households earning a median income can afford to buy a home, followed by 16 per cent of households in Queensland.
"Western Australia didn't have the big run up in prices that we saw elsewhere over the past 10 years," Mr Ryan said.
"In Queensland we're seeing a big increase in prices since the pandemic, but [prices] were starting from such a low base that it remains relatively affordable."
For those waiting for the market to cool down and for prices to soften, it doesn't look like that will be happening anytime soon.
"At the moment, all signals are pointing to continued higher home prices over the next six months or so," Mr Ryan said.
"[As for] interest rates — people aren't picking them to fall to maybe late next year. I think the next 12 months are going to continue to be challenging from a housing affordability stand point, unless something changes with prices."
As cost of living continues to soar, Tasmania's peak body for community services, TasCOSS, said the figures were concerning, given the state has the lowest median income in the country.
The last census recorded Tasmania's average weekly income was $1,358.
"Historically, one of the advantages of living in Tasmania has been low house prices, but we've seen year on year our house prices increasing," said chief executive Adrienne Picone.
"Tasmania is now the least affordable state in which to purchase a property and Hobart is the least affordable capital city in Australia to rent a house.
"This has a particular impact on young people trying to get into the housing market or affording a private rental. But it also, of course, has an impact of disproportionate impact on people living on low incomes, particularly things like Job Seeker."
"They're having to make insidious decisions about whether they eat three meals a day or pay their rent."
Ms Picone fears the continuing trend will push more Tasmanians into poverty and hardship, unless something is done to address rising prices.
"Safe, affordable and secure housing is a basic human right [and we] need to pull every lever at our disposal to start to solve this issue," she said.
"One of the ways we can do that is to increase supply but other things that we can do is we would like to see a cap on rental increases to around CPI, at least until the rental vacancy rates are at a more appropriate rate."
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