The 9th annual Demographia International Housing Affordability Survey Report has been released and no surprises, all of the 39 markets investigated in Australia were classified as “Seriously Unaffordable” or “Severely Unaffordable”. It is perhaps more interesting when investigating the data in more depth, that Karratha and Gladstone are both ranked within the top 10 more affordable of Australia’s 39 markets; seemingly in stark contrast to markets that have experienced strong price growth, strong growth in rental rates, low vacancy rates etc.
And this is where simply reporting this data is somewhat misleading and could give a misguided sense of comfort to communities much in need of the release of affordable housing and housing that is affordable. The rating of these towns has been based on median house prices relative to median household incomes, and Karratha’s median household income at $156,700 was the highest of all 39 markets and Gladstone’s came in at 5th highest.
Herein lies the difficulty – key workers in emergency services, community services, those in the retail sector, food services typically earn wages well below these medians. The latest average weekly earnings publication (ABS) estimates that those in the health care and social assistance sector were earning a wage equivalent to $46,300 and those in the education sector just under $53,000. Housing in these communities for such workers would be considered severely unaffordable.
At the other end of the spectrum – Fraser Coast is ranked as one of the least affordable markets, ranking 31st out of the 39 major markets, but median house prices at $280,000 were amongst the lowest of the markets investigated. Again the application of the relationship between median house prices to median household incomes somewhat masks the real picture, in this case a market dominated by high incidences of retirees. It is acknowledged that the Fraser Coast area is also an area experiencing higher levels of social disadvantage with higher unemployment rates and an economic base dominated by service sector jobs rather than resource sector opportunities.
Whilst the mean median multiple is a recognised rule of thumb for investigating relative housing affordability, and a tool we too utilise, its application must be considered in light of actual local conditions and characteristics.
There were some good news stories in Queensland - Townsville and Rockhampton both rated in the top 10 affordable locations; both we believe, offering opportunities in 2013 and beyond.