Experts declare: Aussie homes are ‘affordable’
Australia still is the lucky country when it comes to buying and paying off a home, according to a surprise new study.
It is cheaper to buy a home in Australia than in 50 other countries worldwide, thanks to relatively high wages and lower than average interest rates, a new report reveals.
Just when you thought we were doing it tough, research by BestBrokers.com, comparing home prices and average incomes across 62 different countries, has found we actually rank 12th when it comes to housing affordability.
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South Africa is the most affordable country to buy a home, according to the research.
There, a 100 sqm home costs roughly 71 monthly wages to afford to buy.
The US ranks second, with home buyers there needing to save only 76 average monthly incomes, while Bahrain is the third most affordable, followed by Denmark and Ireland.
AUSTRALIA IS ‘SOMEWHAT AFFORDABLE’
The report found Australia also has some of the highest average home prices, yet is “somewhat affordable” compared to most countries.
It would take 12 years and 3 months’ worth of real income to buy a 100 sqm home at an average $9131 per sqm in Australia.
“To compare home prices across different countries, we looked at the price per square metre in US dollars as of September 10,” Bestbrokers.com spokesperson Paul Hoffman said.
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“We also compiled income data from several sources in order to identify the countries with the least and most affordable homes relative to the average salary of employed people.
“We calculated the number of monthly wages people need to save to afford to buy a home by dividing the estimated price of a 100 sqm home by the real net salary people earn on average each month.”
According to ABS figures, the average full-time adult weekly wage in Australia is $1,923, which translates to a net monthly salary of $6,432.
“We found that Australia has one of the highest average wages among the nations on our list,” Mr Hoffman said.
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Compared to the rest of the world, Australians receive the third-highest pay after Switzerland and Denmark.
The report also looked at interest rates on mortgage loans in the 62 countries when inflation is taken into account.
The cost of borrowing money for a home loan is the lowest in Argentina and Turkey due to hyperinflation in the past year.
Argentina has the lowest ‘real’ mortgage rate in the world at -175.89 per cent, while Turkey ranks second for the lowest mortgage rates at only -10.84 per cent, followed by Sweden (-1.21 per cent), Japan (-0.5 per cent), and Belgium (-0.44 per cent).
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The Russian Federation has the highest ‘real’ mortgage rate at a whopping 12.3 per cent.
Australia is the 20th most affordable country when it comes to mortgage rates, tying with China, Finland, and South Africa, according to the report.
As of early September, the average fixed-rate home loan in Australia was 6.28 per cent, which is considered low compared to the average of the 62 countries — 7.11 per cent.
“When we take inflation into account, however, the ‘real’ mortgage interest rate drops to 3.48 per cent. In June, inflation in Australia was 3.8 per cent and the projected inflation for the third quarter of the year is 2.8 per cent,” Mr Hoffman said.
The ‘real’ interest rate is calculated as the difference between the nominal interest rate (set by the bank) and the inflation rate.
The team at BestBrokers looked at interest rates for mortgages where the rates were fixed for a minimum of five years.
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Originally published as Experts declare: Aussie homes are ‘affordable’
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