Industry body calls for government enquiry to address housing crisis

A leading real estate industry body has called for a government enquiry to address ‘skyrocketing housing demand’.

CEO of the Real Estate Institute of NSW, Tim McKibbin said the contrast between the demand for housing and the available stock is already at ‘critical’ levels – and is only set to get worse.

“REINSW is calling for an immediate and expeditious Inquiry into the inhibitors of supply and then a brutal action plan involving industry and Government to implement the recommendations,” Mr McKibbin said.

“The community is sick of all the talk on this issue. It’s time for action and this means government and industry working together now.”

Homebuyers unable to find a property at their price point have remained in the rental market, where a lack of supply is putting further pressure on rental prices, which have soared 10.2 percent in the past year.

Data from PropTrack has shown rental vacancy rates were at an historic low in March this year. As rental properties become available and have been quickly leased, landlords have had the opportunity to increase rent, further impacting households’ ability to save for a deposit.

In capital cities, rents have risen 13 percent year-on-year, while in regional areas, rents have gone up by 4.5 percent.

CoreLogic reported house values are also on the move, which Mr McKibbin said put the goal of buying a home further out of reach.

“Higher house prices and rents are an unavoidable market consequence of a housing shortfall, and without more social and affordable housing, increased homelessness is a catastrophic social consequence,” he said.

“There is already evidence of prices beginning to rebound and we need to remember that the bull-run through the pandemic typically pushed median prices up between 20 percent and 30 percent, depending on the area.

“The rebound in house prices is no surprise. The lack of supply is the primary enemy of affordability.”

Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.

Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.

“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.

CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.

Sydney

Sydney’s median house price is $1,414,229 and the median unit price is $839,344.

Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.

Melbourne

Melbourne’s median house price is $935,049 and the median apartment price is $612,906.

Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.

Brisbane

Brisbane’s median house price is $909,988 and the median unit price is $587,793.

Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.

Adelaide

Adelaide’s median house price is $785,971 and the median apartment price is $504,799.

Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.

Perth

Perth’s median house price is $735,276 and the median unit price is $495,360.

Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.

Hobart

Hobart’s median house price is $692,951 and the median apartment price is $522,258.

Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.

Darwin

Darwin’s median house price is $573,498 and the median unit price is $367,716.

Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.

Canberra

Canberra’s median house price is $964,136 and the median apartment price is $585,057.

Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.

Industry body calls for government enquiry to address housing crisis

The housing affordability crisis demands attention now, as values are on the move again, REINSW says

New research suggests spending 40 percent of household income on loan repayments is the new normal