Australian house prices have moved from being affordable to severely unaffordable in the last 10 years and it will take at least another 10 years of flat house prices coupled with income growth for houses to regain an affordable status.
This is the key finding of the AMP.NATSEM Income and Wealth Report: The Great Australian Dream - Just a Dream? which examines housing affordability in Australia using two measures: housing stress, based on the proportion of income spent on housing costs like mortgage and rent; and the house price to household income ratio - the higher the ratio, the less affordable the housing.
The report found median house prices grew 147 per cent to $417,000 while median after-tax incomes only increased 50 per cent to $57,000 from 2001 to 2011, pushing the price to income ratio from an affordable 4.7 to a severely unaffordable 7.3 today.
In 2001, more than 50 per cent of all suburbs in Australia's five major capital cities were affordable but today only four per cent are affordable and not one of these affordable suburbs is in inner city areas.
Read the Media Release (60) for a summary of the findings
Photo: woodleywonderworks / flickr