Housing most affordable in 35 years

Loosening the mortgage belt: household interest payments at a 35-year low

Interest rates are only expected to get lower, so we could see affordability improve even more in months to come.

 

Can you please link us to where you got this info please

 

I'd say in 2018-2020 approx, it was the most affordable . But now is an affordable time too for many areas.


Unless you want your first place to be on the water a few km from Sydney CBD

 

Interest rates have halved in a short time period, and are down ~50% in a very short time period. Prices haven't risen all that much in a near corresponding time period.

Thats a formula for rising 'affordability' based on interest as % of income metrics.

There's also been substantial tax cuts, that are worth a fair bit in terms of 'gross wage increases'. I.e. while wages may not have increased all that much in recent years, net disposable income, the metric that actually hits back pockets, have led to a ~10% net increase in incomes for many income households over the past few years (because of tax cuts).

Halving interest costs and increasing net disposable incomes on mass for homebuyers makes an attractive 'affordability' formula.

 

Deposit to median disposable income. How is that looking on an affordability basis?

 

Would serviceability have increased for many folks?

 

Interesting assessment, I also interpret those levers being pulled, while prices staying (roughly) the same during a time when savings are at an all-time high means QE and FHB schemes (including the super withdrawal) are having less impact than they did the last time rates plunged. I'll try to find the graph showing this. IMO feels like a price ceiling, but my gut does tell me price will increase this year as stock will stay low (people wanting to keep money in assets as inflation is bound to happen)

 

From everything I'm sensing and seeing, many areas will keep rising, although I do think some are at or near ceiling levels potentially.

 

A lot for the majority, materially too. Net income rises and interest rate cuts are powerful boosters to serviceability. Since 2017, its up around ~30%. Applies to majority too. Serviceability tightening has occurred to repeat investors which this forum knows all about, but that is a very small part of the market.

 

16m² in Elizabeth Bay?

 

What do you think is at or near ceiling?

 

30% is interesting, I wonder if it's any coincidence the RBA speculated the market might go up by 30% too...

 

https://www.smh.com.au/business/the...ayments-at-a-35-year-low-20210219-p5744d.html

"Interest paid by Australian households dropped to about 5.5 per cent of disposable income at the end of December, analysis by AMP Capital shows.

That compares to nearly 9 per cent in mid-2019 and more than 13 per cent in 2008. Household interest payments as a proportion of disposable income are at their lowest mark since the mid-1980s.

Household interest payments climbed to about 10 per cent of disposable income in the late 1980s when official interest rates surged to 18 per cent. The proportion of income used for interest payments peaked again in 2008 at 13.3 per cent when the effects of the mining boom helped push interest rates higher".

Dr Oliver says mortgage debts will take much longer to pay off than in the past.

“People are borrowing a lot more than they did 35 years ago,” he said. “The reality is that in a world of low interest rates and low wages growth, it’s going to take a lot longer to get that debt burden down than previous generations.”

 

Prices of some suburbs in Sydney. I think even if they go higher, when prices retract they may come back to current levels. I am only suggesting this for certain suburbs and stock type. But based on all the indicators atm, there's more run for many markets I'd guestimate.

 

Every time I read the comments in articles like this it feels like the end of the world is near. Maybe I should invest in a bunker instead.

 

Maybe show this piece to the ABC. I watched 7:30 last night (first time in months) and the usual hand-wringing about young people who cant afford to buy a house.

7.30: Monday 22/2/2021

 

Link?

The amount of first home buyers in 2020 was at the highest levels since 2009, which was obviously stimulated by all the first home owner grants etc.

 

Yes but you still need money. You can't blame them; I want money too. The freer the better.

 

Their housing research is far more sophisticated than borrowing powers, although credit supply/cost will definitely be one of the largest factors that go into their model assumptions.

 

COVID-19 hit many Australians hard, but there were winners in the pandemic economy

Pretty good result. The first home buyers saved $35,000 last year and brought in December.