Australia's Housing Affordability Hits Lowest Level in 30 Years

In its annual report on housing affordability, property analyzing firm PropTrack pointed out that the deterioration was driven by surging home prices throughout the pandemic and consecutive interest rate hikes over the past year.

"The PropTrack Housing Affordability Index shows that, by June 2023, households across the income distribution could afford the smallest share of homes since 1995 when our records began," the report wrote.

According to the report, households in New South Wales (NSW), Tasmania, and Victoria face the toughest affordability, while Western Australia is the most affordable state.

With a median home price surpassing 1 million Australian dollars (about 0.6 million U.S. dollars) in Sydney, NSW continues to rank as the least affordable, as it has for most of the past three decades.

"The silver lining is that it looks like we are close to the peak in interest rates ... While it's possible we may still get a couple more, we are very unlikely to see anything like the pace of increases that we have seen," said PropTrack senior economist Angus Moore.

"Another good news is that labor markets are very tight and wages are growing, which will slowly start to offset the increase in mortgage costs," Moore added.

However, the economist also noted that for homebuyers, house affordability is likely to remain tough for a while.

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