You wouldn’t know it from some mainstream media reporting, but housing affordability is actually getting better, not worse.
That doesn’t mean it’s suddenly become easy for first home buyers to enter the market or for buyers of any kind to service a mortgage.
All it means is that it’s now less hard.
The latest quarterly Adelaide Bank/REIA Housing Affordability Report shows that during the September quarter, housing affordability improved in all states and territories, in both quarterly and annual terms.
Across Australia, the proportion of median family income required to meet average loan repayments fell to 30.3 per cent, from 31.5 per cent.
The improvement is pleasing – but let’s not celebrate just yet. The result is still worrying, given that the benchmark for mortgage stress (the ratio between your mortgage repayments and your income) is actually set at 30.0 per cent.
As I said, things aren’t easy, just less hard.
State-by-state mortgage repayments
As always, the national figure conceals a wide divergence in regional results. So here are the state-by-state numbers:
- NSW = 36.1%
- Victoria = 32.2%
- Queensland = 26.8%
- South Australia = 25.3%
- Tasmania = 23.3%
- Western Australia = 22.4%
- Northern Territory = 19.4%
- ACT = 18.5%
News is in the eye of the beholder
If housing affordability has been getting better, why aren’t we rejoicing?
Firstly, it’s worth bearing in mind that bad news always gets more prominence than good news. Journos write about the planes that crash, not the ones that land safely.
So for Western Australia, there’s every chance you’ve heard far more about falls in property prices than the correlating increase in housing affordability for first home buyers. Also, if you’re reading national publications, chances are you’re reading the work of someone writing on the eastern seaboard.
Be like John McGrath
There’s a lesson here for real estate agents: don’t let the media noise put you off your game.
Journalists have to pump out stories every day, and they instinctively gravitate towards the negative. That’s their reality, but it doesn’t have to be yours.
The other point worth mentioning is that real estate is a hyper-local game, while the mainstream media quotes numbers that apply to a city or a state or the entire country.
When it comes to your local patch, the media can’t tell you what’s happening with housing affordability or any other macro issue.
That’s why John McGrath advises agents to block out the media noise and focus on the basics. Wise advice.
