Australia Suffers Real Estate Affordability Crisis

And there appears to be a conflict with regards to the real estate situation down under. While on one hand the housing industry in Australia are showing signs of recovery, yet on the other hand there still seems to be an affordability crisis of sorts, more so for renters and first time home buyers alike.

Dr. Alex Joiner, ANZ Economist says, “..constrained supply and robust demand will leave house prices well supported and combined with upside risks to mortgage rates, the deterioration in housing affordability will make entering the market difficult, especially for first home buyers,’ ”
The Real Estate Institute of Australia predicts that housing affordability in Australia for 2008 is going to worsen. This is mainly attritbuted to the increase in property prices and borrowing costs as well, in addition to the fallout of the US Subprime market. An overview of the affordability scene in Australia, does not look good and shows no signs of abating.
In order to take stock for higher funding costs, Australia’s largest bank, National Australia Bank Ltd., just a few days back rasied interest rates on mortgages. Other banks are predicted to follow.
It’s also predicted that the prices will continue to increase for 2008 in most Australian states, with the exception of New South Wales. The increase in prices has been attributed to a rise in population, shortage of supply of new accommodations and a growing demand for housing in locations that are close to the work place.