Current at: 15 August 2008
First home buyer housing affordability barely improved in June, languishing at a 24 year low. The HIA-CBA First Home Buyer Affordability Index inched up by just 0.3 per cent during the June 2008 quarter to still be 6 per cent lower than a year earlier.
In the June quarter of 2008 financial institutions lifted interest rates independently of the Reserve Bank. The average home loan repayment (over this period) increased by 1 per cent to $2,827 per month.
HIA’s Chief Economist, Mr Harley Dale said that even a modest reduction in mortgage rates in the second half of the year would do little to improve affordability in the short term. “High interest rates and an extremely onerous set of local, state and federal government taxes and charges on new housing continue to slug new home buyers,” said Harley Dale. HIA is concerned that the full effect of skills shortages is also yet to be felt and that these shortages will pose a further threat to housing affordability.
“It is clear that unless there is action in removing the layered taxation and other imposts on new housing that affordability and availability will continue to decline. Affordability will only improve if all governments work together to remove the onerous tax burden and regulatory imposts on new residential construction,” Mr Dale added.
HIA is concerned that the Treasury Tax paper released last week, has given scant regard to the decline in housing affordability. The paper makes no mention of the impact of increased development charges or the impact of the ‘tax on tax on tax’ situation that occurs when GST, development charges and stamp duty are calculated on top of each other. The report showed that affordability deteriorated in Sydney, Melbourne, Adelaide, Hobart, Regional Queensland and Regional South Australia over the June quarter.
