Australian housing affordability gets worse

Australian housing affordability gets worse
Housing affordability has deteriorated across Australia with global ratings agency Moody’s warning that high debt levels are leaving households more vulnerable to economic or housing market shocks.

Moody’s said affordability varied across the country and while it had improved in Sydney, Perth and Adelaide, it had deteriorated sharply in Melbourne and Brisbane.

Melbourne recorded the biggest decline in affordability of any Australian city for both houses and apartments over the year.

And while there had been an improvement in Sydney, this had only been because there had been a slight decline in housing prices from highest levels in Australia.

Moody’s found that Australian households with two income earners on an 80 per cent loan needed 28.7 per cent of their monthly income to meet monthly mortgage repayments in September 2017. That’s up from 27.4 per cent in September 2016.

“Less affordable mortgages increase the risk of delinquencies and defaults and are therefore credit negative for Australian residential mortgage backed securities,” Moody’s vice-president and senior analyst Alena Chen said.

She said “housing market imbalances” and the large build-up of household debt, with Australia’s household debt as a percentage of household disposable income now at a record high 193.7 per cent, “continue to pose risks”.

“High debt levels make households more vulnerable to economic or housing market shocks, and make meeting mortgage repayments more difficult, increasing the risk of delinquencies and defaults,” Ms Chen said.

The Moody’s report coincided with alarming data yesterday from the Australian Financial Security Authority showing were 8,194 new personal insolvencies in the September quarter 2017. This was an increase of 8 per cent compared to the September quarter 2016.


An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.

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