A recent survey shows that Melbourne is now the least affordable major Australian city. Although the affordability of housing in Melbourne has improved, Melbourne properties are now more expensive than properties in Sydney.
The Housing Industry Association said that during the third quarter of 2010, housing prices increased by 3.6 percent. Current rates are 18.3 percent lower than last year’s rates, Melbourne overtook Sydney due to increased costs of borrowing and higher property prices.
The increase of property prices in Melbourne and lower average income of Melbourne workers also contributed in making Melbourne the least affordable major city property-wise. He added that the three cash rate hikes in the early part of 2010 took its toll on housing affordability. Thus, the housing outlook in the short-term is bleak although the third quarter of 2010 gave some relief.
Among all major Australian cities, Adelaide had the best housing affordability improvement with 6.3 percent. Following Adelaide are Perth and Brisbane with improvements of 5.9 percent and 5.4 percent respectively. Meanwhile, Sydney, Melbourne and Hobart improved by 1.9 percent, 1.7 percent and 1.2 percent respectively.
However, housing affordability in Canberra decreased by 8.6 percent. Area-wise, housing affordability significantly improved in Tasmania, Queensland and Western Australia. South Australia and New South Wales showed decent improvement while housing affordability in Victoria went down. Also, this housing affordability index does not include the latest RBA official cash rate increase to 4.75 percent.
Despite the official cash rate hike and the interest rate increases of variable mortgages by the big commercial banks, report show that households are still paying mortgages without struggling.
