Mortgage Stress

A research note from NATSEM released yesterday highlights Australian house prices being even more out of reach of first home buyers that they were at the start of the decade. NATSEM equates first home buyer mortgage stress to those first home buyers whose mortgage cost would exceed 30% of disposable income. In 2000 this was 43% of households nationally and in 2010 the percentage has increased to 47%. Highest stress is in NSW at 53% and biggest increase over the decade is in QLD where it has jumped from 35% to 49%.

FinDem tracks house price affordability in the Research Centre Data Series with two indicators. One is Australian House price divided by annual average gross earnings; the second one is Sydney House prices divided by annual average gross earnings. The national multiple has now reached record levels at 8.5 times earnings. Sydney House prices are 9.6 times earnings, still below the peak of 11.2 reached in 2004, but still twice the multiple faced by baby boomers when they bought their first house in the early 1970's

You can find the NATSEM report at http://www.canberra.edu.au/centres/natsem/attachments/pdf_folder/R10_1-_bp-FHB-Mortgage-Pressure2.pdf

Ready made FinDem Graphs of the National and Sydney multiples are at:

http://www.findem.com.au/admin/newsgraph20101026a.png and

http://www.findem.com.au/admin/newsgraph20101026b.png

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