City of houses out of reach in affordability By Evonne Barry From: Herald Sun August 19, 2010 8:43AM
First time buyers are feeling the pinch of tightening housing affordability. Picture: Chris Groenhout Source: Herald Sun Home refinancing demand jumps. Play
12345LoadingPlease login to rate a video.You can't rate an advertisement. (no votes yet) Home refinancing demand jumps Historically low rates are enticing more Americans to try to refinance their home mortgages. Views today: 0Sorry, this video is no longer available. .HOUSING affordability has plunged to near-record lows, and aspiring home buyers are suffering the worst of it. Increasing numbers of property hunters across the country are being squeezed out of the market, according to new figures.
The latest HIA-Commonwealth Bank Housing Affordability Index, released yesterday, revealed a series of forces had conspired against first time buyers in the past 12 months.
The index, which calculates the combined impact of interest rates, property prices and household incomes, shows "affordability" plummeted 31.6 per cent nationwide in the year to June.
In Melbourne, the index fell to 39.8 per cent -- the worst drop of any capital city.
While Sydney remains the most unaffordable property market in the country, analysts say Melbourne is steadily closing the gap.
Housing Industry Association economist Harley Dale said Melbourne's soaring house prices -- the steepest in the country over 2009-10 -- were mainly responsible for the affordability crisis.
"They've gone off like a rocket and that obviously doesn't help first home buyers," he said.
"You've also got interest rate rises coming in last year. (Combine those) and affordability has consequently taken a tumble."
Former home owners Cheryl and Greg Wood are among those are watching Melbourne's market movement with dismay.
The parents of two sold their first home in Cairnlea, in Melbourne's west, in 2008 after work commitments drew them to the city's east.
"We intended to rent for a year, and then buy again, but then held off because the market was going crazy," said Ms Wood, mother to Elizabeth, 4, and Charlotte, 11 months (pictured above).
"Property prices just haven't stabilised. There have been a couple of properties we could have bought. And we should have, in hindsight, because the prices are just astronomically high now."
Real Estate Institute of Victoria spokesman Robert Larocca said the median house price in Melbourne had hit $559,000, up from $441,000 a year ago.
According to HIA figures, the monthly loan repayment for an average mortgage has hit $3291 in Melbourne, and $2238 across Victoria -- up from $1947 and $1499 a year ago.
