Regional Areas Increasingly Unaffordable
Australia’s regional areas experience a sharper decline in affordability than the capital cities.
Australia’s regional areas experience a sharper decline in affordability than the capital cities.
Regional areas have felt the affordability pinch far greater than capital cities according to the latest report by the Housing Institute of Australia (HIA).
“Housing in Australia became less affordable in the December 2020 quarter due to rising house prices and a slight fall in average incomes. Despite the decline, housing is considerably more affordable than the average over the past 20 years,” stated Angela Lillicrap, HIA’s Economist.
HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.
“Regional areas experienced a larger decline in affordability than the capital cities. The regional index fell by 3.7 per cent in the quarter to return to the level it was in December 2019,” added Ms Lillicrap.
Ms Lillicrap also said that COVID-19 was a driving force that shifted consumer preferences in the first three quarters of 2020 with migration data showing more Australians left the capital cities during that time since records began in 2001.
“As a consequence of this shift in population, house prices in regional areas outperformed the capital cities over the past year.
“Sydney continues to be the most unaffordable market with an index reading of 66.4 in the December quarter. Melbourne is also considered an extremely unaffordable market with an index level of 77.5,” concluded Ms Lillicrap.
The HIA Housing Affordability Index for the capital cities decreased by 2.5 per cent in the December 2020 quarter, meaning affordability deteriorated. This was driven by declines in Darwin (-4.9 per cent), Brisbane (-3.1 per cent) and Adelaide (-3.1 per cent). Hobart and Perth both declined by 3.0 per cent, followed by Canberra (-2.8 per cent) and Melbourne (-1.4 per cent). Affordability in Sydney declined by 0.8 per cent. Regional areas declined by 3.7 per cent over the same period,
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After more than a year, prices have finally levelled out in prime central London, while outer London saw a small uptick in high-end prices from the previous quarter
The first quarter of the year brought some long-awaited signs of recovery in London’s luxury housing market, offering the first positive quarterly price growth since September 2022, according to a report from Savills on Wednesday.
After six consecutive quarterly price falls, luxury home prices in central London levelled out in the first three months of the year, with a 0.1% quarterly uptick in prices. The £3 million to £5 million (US$3.79 million to US$6.32 million) market saw a slightly larger increase of 0.3%.
Outer London’s luxury market saw greater quarterly price growth, with home prices up 0.8%, as some stability returned to mortgage costs and lured more buyers back to the market, according to the report.
All of this is evidence that the market is “in early stages of recovery,” according to Lucian Cook, head of residential research at Savills.
“The outlook for the housing market has certainly improved, partly because the mortgage market has recovered more quickly than expected,” Cook said in the report. “With the first rate cut rapidly coming into view and recessionary risks easing, greater stability has returned to the cost of mortgage debt, which has positively impacted domestic prime markets, where many buyers rely on borrowing, most notably in leafy outer prime South and West London, as well as the commuter belt.”
Outside of London, prices across the U.K. saw no quarterly growth heading into the beginning of the spring market, which is expected to bring higher levels of buyer activity in many regions.
Suburban regions saw prices dip just 0.1%, while urban areas—like Edinburgh and Glasgow in Scotland, and Bath and Oxford in England—saw prices increase by 0.6%.
Cook said regional buyers are more likely to be concerned about market uncertainty than London buyers in the lead up to the general election.
“As a result, buyers are still expected to be less committed until the dust has settled,” he said.
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