ACT reports progress of ‘Better Suburbs’
The ACT government has delivered an update on its “Better Suburbs” plan, detailing the headway that has been made to...
Investors looking to buy in 2014 may find properties becoming less affordable as the run of rate cuts comes to an end, a new report has found.
Housing Industry Association (HIA) economist Harley Dale said house prices would continue to rise over the coming year while economic and financial conditions become less favourable.
“In 2014 we are likely to see further gains in residential property prices, but in an environment of subdued household earnings growth and steady interest rates,” he said.
After its most recent rate announcement, the Reserve Bank of Australia signalled its intention to keep rates on hold for the near future.
Mr Harley said affordability had been strong in the past several years on the back of lowered borrowing costs.
“Those in the housing market or who have been on its cusp and then entered in recent years have experienced a considerable improvement in affordability,” he said.
“This improvement has been driven by an easing interest rate cycle, which now sees borrowing costs at or near record lows.”
However, Mr Harley believes this period has now come to an end.
“The strong cyclical improvement to affordability for existing participants in the homeownership market has therefore run its course,” he said.
According to the HIA-Commonwealth Bank Housing Affordability Index, the data was already beginning to reflect this trend.
Housing costs became more of a burden in four of the capital cities in the December 2013 quarter.
Hobart was hit hardest, with housing becoming 9.2 per cent less affordable.
Sydney saw a fall in affordability of 4.4 per cent, 2.5 per cent and Brisbane one per cent.