Housing affordability slumps further following rate hike
The Reserve Bank’s decision to raise the official cash rate to 4.25 per cent yesterday has made it even harder for Australians to get on the property ladder and that trend is likely to worsen over the year, a commentator has said.
Chris Zappone, a finance columnist for the Sydney Morning Herald, noted that affordability fell by a fifth in the final three months of last year alone, according to a study by the Housing Industry Association and the Commonwealth Bank.
This fall followed previous rate rises by the RBA and the withdrawal of the federal government’s stimulus grant for first home buyers.
Mr Zappone suggested that the RBA’s consistent policy of raising rates as the economy grows could add to Australia’s already acute housing shortage, leading to higher house prices and ever dwindling affordability levels.
"The higher borrowing costs flowing from such moves will deter some housing developers, economists say, meaning that they will make little inroad into reducing the estimated 200,000 housing shortfall," he said.
Australians wishing to compare home loans were presented with a range of rate hikes yesterday following the RBA move, with Commonwealth, ANZ, NAB and Westpac all raising their standard variable mortgage rates by 25 basis points to 7.11 per cent, 6.91 per cent, 6.74 per cent and 7.26 per cent, respectively.
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