Current at: 18 October 2007
A seven-year decline in housing affordability to its lowest level on record has prompted the Housing Industry Association to call on the major political parties to commit to a national affordable housing policy.
The latest report from the Commonwealth Bank and Housing Industry Association shows that housing affordability fell by more than 2 per cent in the September quarter under the weight of the August increase in interest rates and surging established house prices. Housing affordability conditions in the September quarter were the lowest since the series commenced in 1984.
Established house prices soared by 11.4 per cent over the past year and were a major contributor to a further increase in loan payment burdens for entry-level home buyers. A first home buyer on the average household income of $98,000 would have to commit 31.7 per cent of their income to purchase the typical first home, the highest on record. “It is unacceptable that a typical first home buyer would have to place themselves in mortgage stress to purchase a home,” said Ron Silberberg, Managing Director of HIA.
“Australians deserve to have a national housing policy which has as a core commitment to partner with state and local government in delivering solutions to the housing affordability crisis. No amount of finger pointing and blame shift will yield any worthwhile outcomes.
“We are not calling for a free kick. This is about each level of government pulling its weight to provide affordable housing solutions.” Dr Silberberg said.
The key planks of a national housing policy ought to address the lack of affordable land due to the heavy cost burden placed on new home buyers in meeting the community’s need for essential services, such as major roads as well as social facilities. The second plank should help first home buyers to avoid the debt trap.
HIA has called on both sides of politics to establish Home Super Saver Accounts that would assist first home buyers save for a deposit. The Home Super Saver is a pro savings initiative that would reduce excessive reliance on debt and the potential danger of mortgage stress.