You’ve probably noticed the housing market is going a bit crazy at the moment.
FOMO has taken hold and many properties across the country are selling well above their reserve.
As such, housing affordability has deteriorated, says Moody’s Investor Service, reversing the improving trend seen in 2020 during the peak of the coronavirus crisis.
On average, two-income households need to put aside a quarter (24.6%) of their monthly income to meet repayments on a new home loan, as of February 2021.
That’s up from 22.7% in June and July 2020, when new mortgages were the most affordable they’ve been in a decade.
The deterioration in housing affordability was evident in all capital cities over the five months to February 2021, with Perth remaining the most affordable and Sydney the least.
That said, housing affordability still remains better than the ten-year average of 26.1% and well under its peak of 30.7% in April 2011.
That’s because the average mortgage interest rate has nearly halved to 3.65% since 2011, according to Moody’s.
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