With housing prices on the rise, property investors will find the recent research from the Reserve Bank of Australia of interest. In their December quarter RBA Bulletin the RBA point out methods for calculating housing affordability.
There are different methods used: such as calculating affordability around the house price to income ratio, or using the average (mean) price rather than median. Assessing prices across Australia, rather than just focussing on capital cities can also make a huge difference in attaining results.
In 2012, 31% of house sales, and 46% of unit sales were for figures less than $400,000. The largest proportion of these sales was in Hobart, where 67.6% of house sales and 82.5% of unit sales were under $400,000. Adelaide came in second for capital city affordability with 49.7% of houses and 70.7% of unit prices under $400,000.
Conversely, Canberra and Sydney have very few homes or units fitting into this affordable price bracket only 8.6% of houses in Canberra and 3% in Sydney sold for under $400,000.
Regional cities such as Newcastle offer value with a median house price of $395,000, with 51% of houses selling for under $400,000.
