(Australian Associated Press)
The size of the average house deposit is drifting further and further out of reach of first homebuyers.
Average home prices rose 0.7 per cent in January, with the strongest gains in Hobart (1.4 per cent), Sydney (one per cent) and Melbourne (0.8 per cent), according to the CoreLogic Hedonic Home Value Index.
National house prices rose 10.7 per cent in the year to January, taking the median capital city price to $605,000.
That puts the average home value at 7.6 times the average annual salary of $78,832, up from 4.3 times in 2002.
CoreLogic head of Research Tim Lawless said it’s now at the point where the size of the average deposit is drifting out of reach of many homebuyers.
But he believes price growth is likely to moderate in 2017, meaning the financial pain won’t get too much worse.
Affordability issues, rising interest rates, regulatory controls on investors and a growing supply of apartments will take some heat out of price growth, Mr Lawless said.
There is also no signs of the housing bubble popping and prices taking a sharp fall.
“While growth rates are likely to slow over the year, low mortgage rates and strong population growth are likely to keep a floor under housing demand,” Mr Lawless said
The housing market isn’t all doom and gloom for first homebuyers, with the latest price report showing some areas where homes remain relatively affordable.
Outside capital cities, prices are up only 2.7 per cent in the year to January, and in regional Western Australia values fell 10.7 per cent.
CommSec chief economist Craig James said demand for homes still outstrips supply in Sydney and Melbourne, but other property markets show a greater sense of balance.
“Budding home buyers may not be able to currently buy their preferred homes in preferred suburbs, especially in Sydney and Melbourne,” he said.
“But that is always the case. It is matter of re-assessing preferences.”