Homebuyers shut out until 2020

Updated July 28, 2011 10:07:32

House prices in capital cities are forecast to stay severely unaffordable for at least a decade.

A study by the University of Canberra and AMP found that median house prices jumped nearly 150 per cent between 2001 and 2011.

Sydney remains the most expensive place to buy a house with a median house price of $510,000, while Hobart is the cheapest.

Ben Phillips from the University of Canberra is the lead author of the report by the National Centre for Social and Economic Modelling (NATSEM) and AMP, which looked at housing affordability from 2001 to 2011.

The report used prices from RP Data which monitors the price of homes.

While median house prices nearly tripled over the past 10 years, median incomes grew by just half.

Mr Phillips says housing in Australia has become severely unaffordable and will remain so for at least the next 10 years.

He says house prices in Sydney only increased 83 per cent, citing that a lot of their price increases happened in the 1990s.

"It depends which region you're in but across the country we saw house price increases of 150 per cent. Somewhere like Perth there was actually increases that were more than tripling - 221 per cent," Mr Phillips said.

People are increasingly being priced out of regional areas as well.

One of the most surprising figures to come out of the report was how unaffordable houses in places such as Newcastle and Wollongong were.

"It's now the case that these cities are actually just as unaffordable as somewhere like Sydney or Melbourne and the reason for this is because whilst their house prices are a little bit lower, their incomes are significantly lower than a city like Sydney," Mr Phillips said.

Annual after-tax income needed to buy a house jumped from nearly five times annual income in 2001 to more than seven times annual earnings now.

Mr Phillips says that has increased housing stress, especially for single people and single parents.

"I guess the distinction in this report though is we've sort of split it up into the housing haves and the housing have-nots, and the affordability report looks very much at those trying to get into the market as opposed to those who are already in the market," he said.

While prices surged over the last decade, the latest report from Australian property monitors has found the median house price dropped by 0.6 of a per cent in the June quarter.

Topics: housing-industry, university-of-canberra-2617

First posted July 28, 2011 10:01:02

Source: http://www.abc.net.au/news/2011-07-28/capital-city-house-prices-to-stay-unaffordable/2813688

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