MELBOURNE, Jan 4 (Bernama) — Housing affordability in Australia is facing mounting pressures and is likely to worsen this year, the Real Estate Institute of Australia (REIA) says.
Rising interest rates, population growth and price increases caused by a shortfall in the supply of new homes are contributing to a 22-year low in affordability.
As a result many home buyers are considering medium and higher density housing as more affordable options, REIA president Noel Dyett said in a statement.
“In 2008, the main challenges facing the real estate market will be low home loan affordability, the possibility of more interest rate rises, the ongoing fallout from the US sub-prime problems, and an extremely tight rental market driving rents up,” he said.
During 2007 the real estate market was split between established home owners, who enjoyed a “vintage” year, and new entrants who experienced a “less fortunate” time.
REIA’s outlook for 2008 suggests house prices will continue to rise in all states except New South Wales, where the market is more subdued, and Western Australia, where activity has settled.
The Australian weighted average median house price was A$442,758 in the third quarter of 2007, the REIA said.
Sydney had the highest median price at A$538,400 followed by Perth (A$455,000), Melbourne (A$431,000), Canberra (A$425,000), Darwin (A$400,000), Brisbane (A$383,500), Adelaide (A$320,00) and Hobart (A$317,00).
“Well-located property, close to employment opportunities and infrastructure will continue to perform well,” the outlook says.”
“The upward movement in prices for other dwellings suggests that many home buyers are considering medium and higher density housing.”
“It is likely that this sector will experience ongoing price growth during 2008.”
REIA says price rises are being driven by population growth, demand for newer and more environmentally-sustainable housing in areas close to employment and essential services, and a shortfall in the supply of new dwellings.
The transfer of infrastructure costs into the pricing of new homes was also pushing up prices of established homes.