Over the March quarter, the amount of income needed for housing expenses reached new highs, driven by rising mortgage rates and a tighter rental market.
As housing costs escalate, the demographic of private renters is increasingly shifting towards higher-income earners. This change reflects the continuing decline in homeownership rates, which has pushed more individuals into the rental market.
“The portion of income required to service median new rents reached a new high of 32.2% nationally in March 2024,” said Eliza Owen, CoreLogic head of residential research Australia.
For potential home buyers, the financial barriers are growing steeper. The portion of median income needed to service a new mortgage has hit a series high of 48.9% nationally as of March.
Additionally, the time required to save for a 20% down payment has risen to over 10 years for a median household income, making it increasingly challenging for first-time buyers to enter the market.
“Significant challenges are ongoing with supply constrained and material costs high,” said Richard Yetsenga (pictured above), ANZ group chief economist. “International competition for both materials and labour remains intense.”
With affordability pressures mounting, experts are calling for more proactive measures to boost housing supply.
“Residential housing needs to be the number one priority,” said Jess Caire, Property Council of Australia executive director. “We need to be making sure we’re getting more houses across all typologies delivered faster and more effectively.”
This approach aims to mitigate the growing disparity between income growth and housing costs, ensuring more accessible housing for all Australians.
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