What to Know About Housing Affordability this 2023

It's been a while since the housing market in Australia was so buoyant. The expanding economy, falling interest rates, and booming construction sector all played their part in making it easier for Australians to buy their first home than ever before. But as we head into 2023, how will this change? What are the prospects for affordability? And what should you know if you're planning on buying property abroad?

Housing affordability has improved
The housing affordability situation has improved in some ways, but it hasn't improved for everyone.
● Housing affordability is improving in some capital cities. For example, Sydney and Melbourne have seen a rise in the proportion of their households who can afford to buy a home—from 35% and 32%, respectively, to 44% and 43%. In contrast, New South Wales saw its share of homeowners fall from 75% to 63%, while South Australia saw its proportion drop from 70% to 62%.

● Housing affordability isn’t improving for all demographics: While younger people are experiencing improvements in their ability to buy homes (as reflected by higher rates of home ownership), older Australians continue reporting lower levels of mobility across the state/territory than they did five years ago—with just over half stating that they would consider moving interstate if given an opportunity (56%).

Homeownership is still an achievable dream abroad.
While the average home price in Australia is $550,000, it's still possible to purchase a house and live in it. If you're looking for affordability abroad and aren't sure what to expect from your new country, keep reading!

Homeowners are now paying less of their income on mortgage repayments.
Homeowners are now paying less of their income on mortgage repayments.
Interest rates have fallen from the high levels seen during the Global Financial Crisis in 2008, resulting in lower monthly repayments for homeowners. The average first home buyer deposit is now $33,000, and it's expected that this will continue to rise over the next few years as more people enter the market.

Rental prices have also fallen in some capital cities.
Rental prices have also fallen in some capital cities. This is a good thing, as it means that more people are able to afford to live near work or study, and less time will be spent commuting each day. However, rental price falls aren't happening everywhere. The rental market remains competitive across the country, and there are still many properties available at lower rates than they were before the crisis struck.

The improvement in housing affordability means the real estate market is likely to be more buoyant in the coming years.
The improvement in housing affordability means the real estate market is likely to be more buoyant in the coming years. This is good news for those looking to buy a home and bad news for those looking to sell one, but it's also good news for renters and owners of multifamily units who have been feeling squeezed out of their own neighborhoods by buyers who pay much higher prices than they can afford.

We've come a long way since the GFC, and housing affordability is now much more affordable than it was during the peak of the bubble. As we saw in our charts, homeownership is still an achievable dream for many people, and buying a new property is also possible, particularly if you have some savings to put towards it. The real estate markets in Sydney and Melbourne will continue to grow until at least 2026 due to population growth, so there are still plenty of reasons why Australians should consider investing in property abroad.