A new housing affordability index has shown that the “home price-to-income ratio” has returned to its pre-GFC levels and remains in line with its average since March 2003.
Rismark estimates that the average Australian home price across all metro and non-metro regions in Australia are 4.6 times the average Australian disposable household incomes – slightly higher than the average home price-to-income ratio of since March 2003 of 4.4 times.
“During the GFC, Australia’s average home price-to-income ratio fell to a low of 3.9 as dwelling prices declined while household incomes remained surprisingly stable,” Rismark MD Christopher Joye said.
“However, growth in dwelling prices since the start of 2009 has seen the ratio of prices to incomes restored back to around its recent average of 4.4 times.”
Joye said that the findings dismiss claims that Australian home prices are up to eight times incomes and implies that house prices are not as unaffordable as commonly presumed.
“Given that there is around $1 trillion of mortgage debt outstanding in Australia, which is secured against approximately $3.5 trillion of residential property, the gearing is actually less than 30%,” he said.
Rismark estimates that the average Australian home price across all metro and non-metro regions in Australia are 4.6 times the average Australian disposable household incomes – slightly higher than the average home price-to-income ratio of since March 2003 of 4.4 times.
“During the GFC, Australia’s average home price-to-income ratio fell to a low of 3.9 as dwelling prices declined while household incomes remained surprisingly stable,” Rismark MD Christopher Joye said.
“However, growth in dwelling prices since the start of 2009 has seen the ratio of prices to incomes restored back to around its recent average of 4.4 times.”
Joye said that the findings dismiss claims that Australian home prices are up to eight times incomes and implies that house prices are not as unaffordable as commonly presumed.
“Given that there is around $1 trillion of mortgage debt outstanding in Australia, which is secured against approximately $3.5 trillion of residential property, the gearing is actually less than 30%,” he said.
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