A report by CoreLogic highlights the nation-wide issue of housing affordability, showing that there has been a 19% increase in dwelling prices over the last five years, while over the same period household incomes rose 9.2%. This inequality between incomes and housing costs are one contributory factor leading to the housing affordability “crisis” that has received much publicity of late, and that is shown throughout the report to be varied spatially in terms of extent.

The report findings indicate that national affordability has improved in terms of “the proportion of household income required to service a mortgage” as a result of historically low interest rates, which is likely to benefit existing house owners. However the report offers a less positive outlook particularly for first homebuyers, with the dwelling price-to-income ratio and “the proportion of household income required for a 20% deposit” generally worsening.

Nationally, the price-to-income ratio was 6.9x, up from 4.3x 15 years ago. In Sydney, the price to income ratio is 8.3x, compared to 6.6x in the rest of NSW and 7.1x (the next highest) in Melbourne. Nationally, 138.9% of a household income was required for a 20% deposit on a home, up from a figure of 85.9% in 2001. In Sydney this figure sits at 167.7%, compared with regional NSW at 132.9% and Melbourne, again second to Sydney, at 142.8%. In NSW in particular these findings are consistent with continued rising land prices, with total land value across the state increasing by 11.3% to $1.5 trillion in the year to 1 July 2016.

Source: CoreLogic Figure 1: Housing Affordability in Sydney

with a house price to income ratio of 8.6, 171% of household income being required for a 20% deposit (compared to 200+% across some other inner city areas), and approximately 25% of household income required for rentals. Nevertheless, the figures for the Sydney metropolitan area, including Sutherland, reflect the difficulties in purchasing a house that are prevalent in current media and political conversation.

You can download the full report by CoreLogic from their website: www.corelogic.com.au