Housing affordability will continue to improve in Sydney and Melbourne as a cyclical dip causes prices to fall further and earnings keep growing, the Housing Industry Association says.
The dip in prices that pulled home values down 1 per cent in the NSW capital and 0.8 per cent in its Victorian counterpart over the three months to June was likely to last less than two years and not be a sustained fall.
But this would still make housing cheaper relative to incomes as wages grew modestly over the same time, the industry group said.
“We think the cycle is still likely to play out,” HIA economist Diwa Hopkins said. “As you get prices coming off and declining, [even] while wages growth is pretty subdued, that will… further improve affordability.”
The subdued eastern-seaboard housing market – final figures show Sydney returned an auction clearance rate last week of 46.9 per cent, the lowest since December 2012 – is likely to provide some relief after a sustained six-year burst of growth that has highlighted Australia’s inability to keep home purchases affordable.
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Source: Financial Review