If you believe all the hype that the property market is overvalued and impossible for first home buyers to enter – you might reconsider after reading this. What makes property affordable isn’t dependant on the purchase price alone but other contributing factors.
The Property Investment Professionals of Australia (PIPA), a property investment firm recently analysed the current state of housing affordability with some surprising results. After reviewing property prices compared to income and mortgage repayments they believe that property was more affordable now than nearly thirty years ago. The table below compares the year, average size of a home loan, standard variable rate, principal and interest loan repayments and the annual average wage from the 1990’s to today.
|Year||Average loan size||Standard variable rate||Annual P&I loan repayments||Average annual wages||% of annual salary|
Source: Property Investment Professionals of Australia (PIPA)
Basically the percentage of an average person’s income required to make the mortgage repayments is less than in 2010 and even 2005 based on the analysis. A property affordable calculation compares payments. annual wages, interest rates and salaries.
Even when comparing to the 1990s their analysis seems to indicate that property owners may be in a better position today. Of course, a determining factor to this analysis is interest rates, and we all know that there are at historically low levels currently compared to extremely high levels back a few decades ago.
If you want to speak to us about your property options to take advantage of the current low interest rate climate then contact us or call 1300 747 427 today.