Bureau of Statistics figures reveal housing has become less affordable than ever – pricing first-home buyers out of the market

Last week the Australian Bureau of Statistics, drawing on the 2011 census, revealed the median monthly mortgage payments by local government area. The data showed that housing from 2006 to 2011 became less affordable across all price levels.

The figures also show that a number of stereotypes hold true.

Firstly the mortgage belt is an actual thing. The areas with the highest rates of mortgages are all outer metropolitan. The shire of Serpentine Jarrahdale, on the outer south-east of Perth has the highest percentage of mortgage holders in the country. The figures show 55% of houses in that area are owned with a mortgage. Also in the top 10 are the outer-metropolitan areas of Melton and Casey in Victoria, Mallala in South Australia and Camden in New South Wales.

The stereotype of the inner city renters also holds up well. The local government areas of Melbourne, Perth and Sydney are the top three for renters (excluding government and community housing). Among other areas with more than 30% renters in New South Wales are North Sydney, Ashfield, Waverley, Marrickville and elsewhere, Adelaide and Port Phillip.

It will also be no great shock to anyone to discover that the most expensive places to buy houses are in Sydney.

Eleven of the 15 local government areas with the most expensive median mortgage are in Sydney. The other four are all in Western Australia, one of which is in the Pilbara shire of Roebourne:

• Woollahra (NSW) $3,250 (per month)

• Manly (NSW) $3,033

• Mosman (NSW) $3,033

• Hunters Hill (NSW) $3,000

• Ku-ring-gai (NSW) $3,000

• Leichhardt (NSW) $3,000

• Pittwater (NSW) $3,000

• Waverley (NSW) $3,000

• Cottesloe (WA) $3,000

• Nedlands (WA) $3,000

• Roebourne (WA) $3,000

• Willoughby (NSW) $2,817

• Lane Cove (NSW) $2,732

• Claremont (WA) $2,708

• North Sydney (NSW) $2,700

But while it remains the most expensive place to live, it is worth remembering that for most of this century Sydney has not been the boom city for real-estate. If we look at capital city housing prices over the past 10 years, Sydney has had the most consistent growth, but it largely missed out on the absurd explosion in housing prices seen in Perth and Brisbane in the first part of the decade.

Those living in Perth are unlikely to forget that prices increased so fast that from 2007 to 2009 it had the highest median housing prices in the country.

This latest data allows us to observe housing prices across the price spectrum. Not surprisingly there is not much movement among areas. Expensive areas stay expensive. Of the 15 most expensive areas in 2011, 12 were in the top 15 in 2006. Only occasionally do you get boom areas such as Roebourne bursting into the top level – shifting from the 55th most expensive area in 2006 to tied for fourth in 2011.

If we break it down to state level, it is rare even for an area which in 2006 had mortgage rates below the state median, to be above the median level in 2011. In Victoria for example, only the shire of Queenscliff shifted from below to above the median. In South Australia only the Yorke Peninsula shires of Tumby Bay and the regional mining centre of Whyalla shifted from the bottom half to the top.

But what is interesting is looking at the growth of each end of the housing sector.

Western Australia and Queensland, due to their high number of remote areas, have the biggest disparity between the most expensive and the cheapest areas. But the biggest difference between the richest 10% and the areas with the median level mortgages is in New South Wales.

The median mortgage in the shire of Warringah with the 10% highest median mortgage payments is $2,600. This is 1.93 times the size of the $1,496 median mortgage in the shire of Lismore, the area that ranks at 50%. In Tasmania, the difference between areas in the same percentile ranges is 1.25 times.

In all states, the ratio between the areas with 90th percentile mortgage rate and the 50th percentile have either decreased since 2006 or stayed the same. If we were talking about income, this would be a sign of reduced inequality, but here it demonstrates that house prices in the median level across the nation have risen faster than have prices at the top end. In effect it is becoming relatively more expensive to buy a house in the middle range:

This aspect extends to the lower range of the market as well. Only in Western Australia and Tasmania did the median mortgages in the higher end areas rise faster than the bottom end.

And this encapsulates the problem. Most people looking to enter the housing market are not looking to buy high-priced homes in Manly, Stonington, Burnside or Cottlesloe. So while newspapers are attracted to stories of first-home buyers buying a million-dollar terrace home in Redfern, they are the exception. But because the prices of homes in the more median priced areas is rising faster than in the high priced suburbs it has become harder for most first-home buyers to enter the market.

From 2006 to 2011, the median household income only grew by 17% but across Australian median mortgage payments in that period increased 38.5%. Similarly the average first-home buyer mortgage grew by 26%.

Despite the prices paid by first-home buyers not growing since 2011, in that time first-home buyers have been squeezed out of the market. Because while the ability for first-home buyers to pay for a home has not grown, the supply of houses available at that price has declined:

It would seem the growth in housing prices to 2011 has put home ownership out of reach for many. The increase in prices across the board – but especially at the lower to median level – means that for many young people the great Australian dream of home ownership will forever remain a dream.