Are we redefining what’s considered affordable housing?
With our market update last week discussing the increasing levels of properties worth at least $1 million, it’s timely to see the latest news from Corelogic confirming a deterioration in housing supply under $400,000.
The research shows a substantial drop in homes selling at the affordable end of the market. Across the nation in the last year, 31.2 per cent of houses and 37.3 per cent of units sold for less than $400,000. In stark comparison, a decade ago, 62.4 per cent of all house sales and 68.9 per cent of unit sales were sold in the same price bracket.
Unsurprisingly, sales under $400,000 today are rarest in our capital cities. Ten years ago more than half of all capital city house and unit sales came in under $400,000, at 53.1 and 66.3 per cent, respectively. Today, those figures have plummeted to 16.8 and 28.4 per cent. In Sydney, just 3.5 per cent of properties sold for under $400,000 in the past year.
And whilst regional areas are seeing much higher volumes at the $400,000 level, the figures are still trending downward year on year. In the last 12 months, 52 per cent of houses outside capital cities sold for under $400,000, whereas a year earlier that figure sat at 54.3 per cent.
What this data shows us - especially when coupled with the research confirming the rising number of properties worth more than $1 million - is that the reduction in housing affordability is being felt (in varying degrees) across the nation. For most aspiring buyers today, the concept of buying a property for $400,000 or less would seem impossible. It begs the question: are we redefining what’s considered affordable in today’s market?