Housing Affordability

Melbourne Housing Affordability

From 1960 until 1987 the median Melbourne house price was between 3.7 to 4.5 years wages. The really good old days. Loan based on One income, no credit cards, no mobile phone bills for your kids and everyone drove a Holden, (or a Ford). After 25 years the loan was paid off.

	1996	2002	2007
Median House Price ($)	155,000	330,500	470,000
Average income ($)	28,700	$45,902	48,275
Price/Income Ratio (years)	5.4	7.2	9.7
Interest Rates	Low	Low	Rising
Comments	Cheaper to buy than rent	Worst housing affordability in Australia's history	End of the good times. Housing has been falling since.

2009

In the news: Housing now most affordable in 7 years!!!!

That is, it is back to where it was in 2002...

Cynic's View:

So affordability is back at the disastrous level of 2002 and they are regarding that as Good News!

Don't even start to talk to us about housing being affordable until:

- You can buy the Median house in Melbourne with 6 years average wage or preferably less,

- If you have a 20% deposit it is cheaper to buy than to rent,

- No more than 30% of your income is required to meet your repayments

- And your mortgage isn't so large that you don't have to wait until you are 40 years of age and need to go on IVF to start a family

What should be happening is that people decide that prices are still ridiculously high, so they don't go shopping for a house, and prices will have to come down a lot further?

And apart from first home buyers it seems that this may be starting to happen...