Housing Affordability To Worsen Despite Price Fall

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.

Long-term Sydney residents always had handful of not-so-glamourous nicknames for the building on the corner of Cleveland and Baptist Streets straddling Redfern and Surry Hills, but after a modern rebirth that’s all changed.

Once known as “Murder Mall” or “Methadone Mall”, the 1960s-built Surry Hills Shopping Centre was a magnet for colourful characters and questionable behaviour. Today, however, a $500 million facelift of the site — alongside a slow and steady gentrification of the two neighbouring suburbs — the prime corner property has been transformed into a luxury apartment complex Surry Hills Village by developer Toga Group.

The crowning feature of the 122-apartment project is the three-bedroom penthouse, fully completed and just released to market with a $7.5 million price guide.

Measuring 211sqm of internal space, with a 136sqm terrace complete with landscaping, the penthouse is the brand new brainchild of Surry Hills local Adam Haddow, director of architecture at award-winning firm SJB.

Victoria Judge, senior associate and co-interior design lead at SJB says Surry Hills Village sets a new residential benchmark for the southern end of Surry Hills.

“The residential offering is well-appointed, confident, luxe and bohemian. Smart enough to know what makes good living, and cool enough to hold its own amongst design-centric Surry Hills.”

Allan Vidor, managing director of Toga Group, adds that the penthouse is the quintessential jewel in the crown of Surry Hills Village.

“Bringing together a distinct design that draws on the beauty and vibrancy of Sydney; grand spaces and the finest finishes across a significant footprint, located only a stone’s throw away from the exciting cultural hub of Crown St and Surry Hills.”

Created to maximise views of the city skyline and parkland, the top floor apartment has a practical layout including a wide private lobby leading to the main living room, a sleek kitchen featuring Pietra Verde marble and a concealed butler’s pantry Sub-Zero Wolf appliances, full-height Aspen elm joinery panels hiding storage throughout, flamed Saville stone flooring, a powder room, and two car spaces with a personal EV.

All three bedrooms have large wardrobes and ensuites with bathrooms fittings such as freestanding baths, artisan penny tiles, emerald marble surfaces and brushed-nickel accents.

Additional features of the entertainer’s home include leather-bound joinery doors opening to a full wet bar with Sub-Zero wine fridge and Sub-Zero Wolf barbecue.

The Surry Hills Village precinct will open in stages until autumn next year and once complete, Wunderlich Lane will be home to a collection of 25 restaurants and bars plus wellness and boutique retail. The EVE Hotel Sydney will open later in 2024, offering guests an immersive experience in the precinct’s art, culture, and culinary offerings.

The Surry Hills Village penthouse on Baptist is now finished and ready to move into with marketing through Toga Group and inquiries to 1800 554 556.

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.

A Sydney site with a questionable past is reborn as a luxe residential environment ideal for indulging in dining out