Would-be home buyers have been hit by a lose-lose situation since interest rates began to rise and future cuts may not act as previously expected.
Would-be home buyers have been hit by a lose-lose situation of falling borrowing capacity and property prices that have not followed suit, making housing affordability worse.
A dual-income household could borrow a maximum $1,271,000 in April 2022, Canstar estimates show. Now, they could borrow about $964,000 to add to their deposit despite modest growth in wages over the period. A single could borrow only $421,000. Buyers hoping to buy into previously affordable markets such as Brisbane, Adelaide and Perth would have to contend with higher median values than Melbourne, Tindall said.
“There has been some improvement in households’ capacity to pay because interest rates have been on hold over the last year now and incomes have gone up a little bit, but we’re still in a situation where the gap is wide and that hasn’t changed.” Equilibria Finance founder and broker Anthony Landahl said the double whammy of rising mortgage rates and property prices had changed buyer behaviour while others had put off buying a home altogether.
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