Buyers determined despite ‘extremely stretched’ affordability: Westpac
Tight incomes, high interest rates, and cost-of-living struggles have not deterred over half of would-be home buyers, the major bank’s survey has found.
With house prices continuing to climb amid a high interest rate environment and cost-of-living pressures, affordability has become “extremely stretched”, forcing some to delay their home ownership goals.
Westpac’s latest Home Ownership Report (January 2024) has found that survey respondents indicated that they are pushing the timing of their planned purchases back, with 9.1 per cent of prospective buyers expecting to transact in the next six months.
This was down from 13.6 per cent the year prior and was the lowest result across all surveys since 2019.
The major bank expects this to be “relatively short-lived”, however, as 9.5 per cent expect to transact over the next six to 12 months (an increase from 8.7 per cent the previous year).
Affordability factors were most prevalent, with 68 per cent of respondents citing this as an influence, up from 58 per cent last year, and above the 44 per cent average over the previous three surveys.
Over half of respondents cited cost-of-living pressures as a key reason for delaying purchasing plans, with 40 per cent stating they would not be able to buy without family support, up from 26 per cent in 2021.
However, the report found that this has not deterred would-be buyers from planning to buy, with 60 per cent of respondents saying they still plan to purchase in the next one to five years.
According to the report, this figure sat “well above” the rates recorded in previous years of 53.5 per cent.
Potential first home buyers (FHBs) appeared to be the “most priced out” of the survey’s segments, being most affected by affordability and cost-of-living constraints.
Despite this, the report observed an increase in those planning to purchase over the next five years, up from 11.6 per cent in 2019, to 16.3 per cent this year.
Crisis point for affordability
Prior to this report’s release, the Real Estate Institute of Australia’s (REIA) Housing Affordability Report found that housing affordability reached a “crisis point” by the end of 2023.
According to the report, housing affordability fell 2.7 percentage points over the quarter, with the average household spending 47.7 per cent of their income on mortgage repayments.
President of the REIA, Leanne Pilkington, said these results came as “no surprise” with the official cash rate sitting at 4.35 per cent, stating that housing affordability for mortgagees is “the worst on record” since the report was first published.
