Housing Affordability To Worsen Despite Price Fall
While the barrier to entry lessen with house prices set to fall, interest rates rising make serviceability a larger issue.
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Those out there hoping that downward pressure on housing prices would make the market more affordable are set for a shock with houses unlikely to become more affordable even if values were to drop by 20% according to the ANZ/Corelogic Housing Affordability report.
According to the report, higher mortgages would negate any benefit gained from lower prices while ANZ expects the cash rate to rise to 2.25% by May next year – which would trigger a decline in house prices and lower the deposit hurdle.
But housing affordability is still set to deteriorate as mortgage repayments rise and borrowing capacity lessens according to ANZ senior economist Felicity Emmett.
“A lot of people think falling prices will make houses more affordable, but that’s actually not the case,” she said.
“New borrowers will still need to pay higher mortgage repayments even if prices fall by 20 per cent because of the increase in interest rates.
“We found that you would need a very significant fall, something like 25 per cent to offset the impact of rate rises over the next year or so, but we don’t expect that to happen.”
ANZ is predicting house prices to drop by 6% nationally next year, Sydney is predicted for a drop of 7%, Melbourne by 6%, Brisbane 3% and Adelaide 5%.
Perth and Hobart are also expected to fall by 6% each and Darwin and Canberra by 8% each.
Housing affordability has worsened since the onset of the COVID-19 pandemic with the ratio of house prices to household income reaching a record high 9.3 nationwide.
In Sydney that ratio is now 13.3 times higher than household income whereas in Melbourne the value is 10.6, Brisbane 9.0, Adelaide 8.6, Perth 6.1, Hobart 9.8, Darwin 4.5 and Canberra 8.2.
For the average Sydneysider, it now takes 17.7 years to save the 20% deposit to buy a house in Sydney — a rise of two years and 11 months in a 12 month period.
Despite serviceability concerns, falling house prices could also shorten the time it takes to get a foot in the housing market according to Eliza Own, CoreLogic’s head of research.
“Presumably the pressure will be less on the deposit hurdle and more on the amount of income required to service a mortgage, but that is assuming we see consistent price falls off the back of higher interest rates,” she said.
However, the portion of income needed to service a new mortgage to buy a house has jumped to a record 64.4% in Sydney, up from 54% the year prior. Melbourne has lifted to 51.7% from 47.1% last year and rose to 45.25% nationally.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
A new digital real estate site promises a full view of the housing sector, even those places not on the market
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Hot on the heels of the launch of View Media Group last year, Australia’s newest proptech digital media company has gone live with its consumer-facing real estate site, view.com.au.
The new site offers a ‘freemium’ model allowing vendors to list their properties for free while having the option of further upgrades for agents looking to enhance their listings.
VGM executive chairman Anthony Catalano said the model was a ‘game changer’ in the digital real estate space.
“While VMG is much more than a portal play, it’s critical that we have a consumer-facing brand that will act as the front door to attract consumers and in turn allow us to offer products and services in a range of verticals across the property ecosystem,” Mr Catalano said. “Our plan is to create a digital real estate superstore under the new View brand that will play in the $300 billion adjacency categories rather than solely focus on the $1
billion of digital property advertising.”
“We’ve listened to the industry and the time is right for an offer to come to market with an alternative model that addresses the real estate industry’s concern at the continually
escalating price of advertising.”
The View portal is available through app stores and will include properties across the country, not just those on the market right now.
“That means view.com.au will showcase more than 11 million properties in Australia compared to some of the portals which feature around 140,000 properties for sale,” Mr Catalano said. “From Day 1 we will provide consumers with a complete view of the market.’’
View has worked with mapping partner Nearmap to create the ability to have a comprehensive overview of all properties.
“We’ve had a look globally at best practice search for property and we’ve consumer tested a range of options and without doubt the preferred experience is map-based search,” View CEO Toby Blazs said. “So unlike others in the market who default consumers to a list view, we’ll default our search results via a map.”
Mr Catalano said the innovative site was designed to be a true disruptor in the proptech sector.
“VMG continues to grow and tick off the key parts of its strategic plan,” he said. “We are well on the way to forming a global-first conglomerate of proptech assets including portals, ad tech, lead generation, lead management solutions, media planning and buying, AI services, data and connections all under the one roof.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
