A ripper new report by LF Economics is out, entitled Parental Guidance Not Recommended: An Illustrated Guide to the Latest Trends in Affordability in the Australian Housing Market. It assesses the challenges new First Home Buyers (FHBs) and others face versus previous generations in not only achieving home ownership, but the financial risks many Australian parents have taken in the name of securing home ownership for their adult children.
The report specifically examines long-term trends in housing and unit prices, interest rates, household incomes and mortgage costs in order to determine affordability in the Australian residential housing market.
The key findings from this year’s report are as follows:
- Melbourne’s median house price to income ratio has reached 10x;
- Sydney’s median house price to income ratio has reached 13.7x;
- The median house price to income ratio in Australia has hit 9x;
- It now takes more than 8 years for FHBs to save 20% for a deposit for a house – a record high;
- Mortgages issued today will consume a greater proportion of FHBs’ incomes over the lifetime of a new loan than ever before.
- The cost of buying in Australia remains far out of reach for FHBs;
- Parents of FHBs continue to take irrational risks to secure home ownership for their children; and
- Government subsidies to FHBs (FHOG/B and stamp duty discounts) increase demand for housing and increases prices which only serves to make housing affordability worse.
The full report, which contains a plethora of charts and analysis, is available here.
