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SA’s housing unaffordability laid bare in damning new report
Tom Bowden
Tom Bowden, Property Journalist
First published 21 Sep 2024, 5:30am
Housing affordability in SA has never been worse.
That is the damning review from PropTrack’s Housing Affordability report.
The report – a comprehensive measure of the share of homes that households can afford to purchase – reveals housing affordability is at its worst level in at least three decades.
According to the report, an average South Australian would need to have earned a whopping $189,562 to have been able to afford 50 per cent of the homes sold in the 2023/24 financial year.
PropTrack senior economist and report author Angus Moore said there were few green shoots to be found in the report.
“Unfortunately there’s probably not a lot of great news for would-be buyers in here,” he said.
According to the report, an average income household in South Australia – those earning $103,000 – could afford just 16 per cent of homes sold in the state over the past financial year.
This figure was 49 per cent in 2020/21, indicating the steep and swift decline in housing affordability.
Mr Moore said the story for South Australia was bleak.
“South Australia is no longer the affordable state it was,” he said.
“It is now less affordable than Queensland and is now much less affordable than WA and is not far behind Victoria.”
The report reveals an average-income SA household – those earning $103,000 – will need to save for 6.3 years to amass the 20 per cent deposit for a median-priced home.
South Australia also recorded the biggest decline in affordability of any state over the past 12 months.
According to the report, mortgage repayments on a median-priced home as a share of average income have surged to a record high of 37 per cent.
This is higher than the peaks of around 35 per cent reached in 2008 and 1990.
Mr Moore said it was likely many first-time buyers would be reliant on the Bank of Mum and Dad to enter the market.
“If you’re an average income household, and you save 20 per cent of your income, which is quite a substantial chunk, that’s not an easy thing to do,” Mr Moore said.
“It represents a very substantial chunk of your income.
“And many households that are buying are going to be getting that from family or from policies that allow you to purchase with a smaller deposit.”
Mr Moore said the solution to SA’s affordability was simple, but profoundly complex.
“The short answer to a potential solution is to just build more homes – it’s an easy thing to say and a harder thing to do, but that really is the only way we can make housing more affordable,” he said.
“SA is about the middle of the pack in terms of building per capita, and in part that’s a demograhics thing, but it’s not standing out in the way Victoria has over the previous half decade to decade, but there’s certainly more that can be done here.”
Australian Council of Social Services CEO Dr Cassandra Goldie AO said a number of things were needed to ease the current crisis.
“The most immediate relief that can be provided it to increase incomes – no question,” she said.
“We definitely need a large boost in public investment into social and affordable housing – the Government needs to stay the course on bigger investment in that area so we are providing housing which is tied to people’s income so it’s actually affordable for them.
“We also think the tax breaks associated with property investment need to be reviewed so we are encouraging more institutional investors into the property market where they see that providing long-term good renting opportunities for people is turned into a decent housing option.”
With cost of living pressures and soaring rents, biopharmaceutical process engineer Alex Knight, 24, can see why young people aren’t moving out of home.
Mr Knight is currently building his first home in Bowden. But it’s not a goal he’s achieved overnight. Mr Knight first started saving when he was 15, while working at KFC.
He also got help through HomeStart’s graduate loan, which he said allowed him to get in the market earlier and buy a home he liked where he wanted to live.
“I always wanted a home – I didn’t want an apartment, I wanted a home and in the end I compromised and got a townhouse because the market was just so competitive,” he said.
“I really think it will turn out quite nicely, I just need to be patient.”
Set to move in this year, Mr Knight said it had been disheartening watching prices continue to rise as he tried to save.
“I don’t know how anyone moves out of home these days – it’s so rough out there.”
HomeStart CEO Andrew Mills said HomeStart CEO Andrew Mills said it was a challenging environment for first homebuyers.
“For those without access the bank of mum and dad, we provide an opportunity to make their dream a reality.”
