How Affordable is Australian Housing?
With all of the talk about possible housing booms from the media I thought it was important to discuss just how affordable housing in Australia is. According to the latest results from the Housing Industry Association-Commonwealth Bank First Home Buyer Affordability Report, housing affordability has fallen during the June quarter.
It’s also true that Australian family structures are changing due to the cost being out of reach of so many. More people are choosing to live with parents or relatives rather than live in separate households, which in some way reflect not only the increased cost of housing but the increased number of Asian families living in Australia. Many Asian families have several generations living together to share responsibilities within the family unit which reflects their traditional way of living.
It is all too simple to say that as Australia’s population increases and our level of new building activity remains lower than demand that prices will increase. The structure of family is changing due to the enormous cost of housing throughout Australia and more people are choosing to live together to share and reduce the cost burden.
As unemployment and underemployment increases the “new normal” is far different to that of the past. We can expect this trend of cost sharing to continue for generations and simple interpretation of population growth will not necessarily translate to higher property prices. The removal of the first home owner’s grant at the end of the year will indeed place downward pressure on property prices – to what extent remains to be seen.
As I have been discussing in recent weeks it is more important than ever to spend within your means. Do not be frightened into purchasing a property because the media suggest that you may be unable to purchase a home at a later time. If you follow this very simple rule you will make the best decision and will avoid unnecessary financial pressure caused by over-spending.