Sydney becoming more affordable as property prices, rents and rates continue to drop
Climbing Sydney’s once elusive property ladder has been getting easier, with new bank research showing rents, prices and rates are all dropping and the time required to save deposits is shortening.
Things are finally getting easier for Sydney’s long frustrated home seekers — buyers are spending less of their money on repayments and saving a deposit is taking quicker.
Lending figures revealed new buyers paying down a mortgage on an average priced home now only have to divert about 46 per cent of their income into repayments, down from more than half their income two years ago.
And with the Reserve Bank of Australia announcing Tuesday a record cut to the cash rate, which several banks passed on in full to customers, mortgages are set to become even more affordable.
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The time it takes the average buyer to save a 20 per cent deposit for a home has also shrunk from 13 years to roughly 11, according to the research by ANZ and CoreLogic.
This was assuming they earned Sydney’s average household income of $94,588 a year.
The gains represented the first time Sydney’s housing market showed a prolonged improvement in affordability in nearly seven years.
With growth in wages largely stagnant over the period, much of the improvement has been driven by falling prices and lower rates.
The median price of a Sydney home has dropped close to 15 per cent since the market peaked in July 2017 and is now about $808,000.
That price is 8.5 times the average household’s annual income — still the highest in the country but lower than in 2017, when prices were almost 10 times typical wages.
Home buyers have also been helped on the rental front, with more affordable rents making it easier to save.
A home at Sydney’s average rental price will now chew up 32 per cent of the average household’s income, down from 34 per cent two years ago.
ANZ Homeowners Portfolio lead Kate Gibson said home seekers could expect further improvements in affordability as prices continued to drop.
“It might be cold comfort knowing it still takes 11 years to save a deposit but we will continue to see small declines in values that will make it easier,” she said.
Ms Gibson added that there were plenty of city regions where buyers could nab homes considerably more affordable than the Sydney average.
Mortgage repayments on Penrith and Blacktown properties only required 34 per cent of the average household’s income, while repayments on homes in Camden in southwestern Sydney needed 33 per cent of income.
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Real Estate Institute of NSW’s incoming president Brett Hunter said first home buyers would have particularly good buying opportunities due to government incentives, such as discounts on stamp duty for homes bought for under $850,000.
“First home buyers have all the power in the market right now. They have all the support from the government, the central bank, the lenders, and there are plenty of incentives aimed at first timers seeking to buy off the plan property,” Mr Hunter said.
Originally published as Sydney becoming more affordable as property prices, rents and rates continue to drop