Affordability has been a mixed bag for rental and sales markets in major cities and regional markets over the past year.

The latest survey from the National Housing Finance and Investment Corporation (NHFIC) sheds light on deteriorating affordability, particularly for the rental market, which remains most inaccessible to lower-income earners in major cities and regions.

In fact, the lowest income earners can only afford to rent 10% or less of the properties in all of Australia.

Interestingly, the two largest cities – Sydney and Melbourne – have seen modest improvement in the affordability of rental housing in the past year.

The impact of closed borders causing a decline in net migration has offset the limited supply as vacancy rates fall.

For example, Sydney renters in the second income quintile can now afford 10% of housing, down from less than 10% in June 2020, the report said.

This was the opposite in other major cities and regions, where a deterioration in rent affordability was more common.

For example, despite modest increases in affordability in Sydney and Melbourne, regional NSW and Victoria deteriorated.

“Third income quintile tenants in regional NSW and Victoria can afford 30% of rental housing, up from 50% in June 2020,” the report said.

According to the report, the most unaffordable rents were in Hobart, with lowest-income renters affording only 10% or less of the rental properties on the market.

Perth also witnessed a significant deterioration in the affordability of rental housing – low-income people can now afford less than 10% of properties, up from 25%.

Affordability deteriorates for first home buyers

The report also highlighted how the pandemic has made conditions difficult for many potential buyers looking to enter the housing market.

The affordability of first-time homebuyers in most low-income classes actually deteriorated over the year as a result of the sharp rise in house prices.

Still, affordability remained relative and dependent on geographic locations.

In Perth, for example, potential first home buyers found much more favorable buying opportunities.

Low-income people in Perth can afford about a third of the houses on the market.

But the situation in Perth is a long way from Hobart, where affordability has deteriorated the most. Four in five first-time home buyers in Hobart can afford only 10% or less of the properties.

Regional first home buyers were placed in different scenarios depending on location, with affordability improving in regional South Australia, Queensland and Western Australia, while deteriorating significantly in New South Wales, Victoria and Tasmania.

Photo by Micheile on Unsplash.

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