Record mortgage stress ahead of rate cut
Friday, 05 September 2008
Australian property prices may have softened in 2008, but housing is no cheaper as affordability reaches record lows, and NSW & QLD appears to be the hardest hit.
A June 2008 report released by Real Estate Institute of Australia (REIA) found that Australian households need 39.8% of the family income to meet mortgage repayments, the highest figure recorded in the 22 years REIA has been collecting the data. Mortgage stress is considered to occur when over 30% of income is allocated to loan repayments, and with NSW and QLD at levels of 42.6% and 41% respectively and all other states with the exception of NT & ACT above 30% Australians are stretched. Economic uncertainty and high interest rates caused the deterioration in housing affordability in the June quarter. Announcements of interest rate cuts by the Reserve Bank of Australia will bring some relief for stressed out homeowners.
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