NHFIC releases housing affordability analysis

The National Housing Finance and Investment Corporation (NHFIC) today releases new housing affordability analysis on first home buyers and renters in capital cities and regional areas.

This work builds on NHFIC’s prior research on housing affordability and will form part of NHFIC’s forthcoming second State of the Nation’s Housing report, due out in early 2022.

Key findings include:

• Prospective first home buyers in regional SA, WA and Qld continue to experience favourable affordability outcomes compared with those in most major cities. Meanwhile, first home buyer affordability deteriorated substantially in regional NSW and regional Tas. In these regions, the bottom 40% of income earners can afford up to 10% of homes for sale.
• Sydney and Melbourne saw modest improvements to rental affordability on average due to a decline in net migration driving rents lower, although vacancy rates have been declining. Rental affordability remains challenging in most cities and regional areas for the bottom 40% of income earners, who can typically afford to rent up to 10% of properties.
• Melbourne is the most affordable capital city for renters, while Perth is the most affordable capital city for potential first home buyers. The bottom 40% of Melbourne income earners can afford up to 30% of properties available for rent, and the bottom 60% of Perth income earners can afford up to 50% of properties for sale.
• Hobart is the least affordable capital city for both renters and potential first home buyers. The bottom 60% of Hobart income earners can afford up to 10% of homes for rent, and the bottom 80% of Hobart income earners can afford up to 10% of homes for sale.

NHFIC analysis uses Lorenz curves to assess affordability because they provide a richer insight into the distribution of housing affordability for people at different income levels and across different geographies, instead of standard average measures which provide no information on the distribution of affordability outcomes for different household types, particularly those with lower incomes.

NHFIC’s upcoming State of the Nation’s Housing 2021 report will be published in early 2022 and will also feature research on: the housing market, household formation, housing supply, cities and regions during COVID-19.

Please visit our research portal to view this research paper.