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RBA finds 85 per cent of apartments and 93 per cent of homes beyond the reach of typical first time Sydney buyers

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A typical Sydney first homebuyer can afford just one in every 10 properties in the city and must move an average of 31 kilometres from the central business district to buy a flat and 56 kilometres from the CBD to buy a detached home, a Reserve Bank study has found.

A new housing accessibility index developed by the bank shows the purchasing capacity of the “median potential first homebuyer” in Sydney last year was $474,000.

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Do we have a housing supply issue?

A study by the Australian National University finds there’s an oversupply of home units in most Australian capital city inner areas.

That puts 85 per cent of apartments and 93 per cent of detached homes in the city beyond their reach following a five-year boom in Sydney property prices.

The Reserve’s investigation of affordability for first homebuyers found the average distance to the CBD of homes accessible to the median potential first homebuyer in Sydney has grown “consistently over the past decade for both houses and apartments.”

Apartments affordable to the median potential first homebuyer are now an average of 11 kilometres further from the CBD ... Apartments affordable to the median potential first homebuyer are now an average of 11 kilometres further from the CBD than they were a decade ago. Photo: Arsineh Houspian

Apartments affordable to the median potential first homebuyer are now an average of 11 kilometres further from the CBD than they were a decade ago. Separate houses affordable for the median potential first homebuyers are now an average of 12 kilometres further from the CBD than they were a decade ago.

Also, the size of housing affordable to first-time buyers has declined considerably.

“In all capital cities, the average number of bedrooms in affordable housing has declined over the past 20 years, most notably in Sydney,” the study found.

“This partly reflects apartments being smaller and an increased share of affordable homes, although the average number of bedrooms for affordable houses has also declined over time.”

This is how far out typical Sydney first homebuyers have to move. This is how far out typical Sydney first homebuyers have to move. 

Meanwhile, the average number of bedrooms in the housing stock assessed as being out of reach of first home buyers has increased.

The Reserve Bank study concludes “some structural decline” in the quality of housing that is affordable to first home buyers.

The study, titled “Housing Accessibility for First Home Buyers” by RBA economists Gianni La Cava, Hannah Leal and Andrew Zurawski, said a little over 20 per cent of dwellings in Melbourne were affordable for a typical first homebuyer.

Nationally, the median potential first homebuyer could afford about a third of all homes sold in 2016. In regional areas almost half of the housing stock sold in 2016 was affordable, which was a little higher than the average of the past 20 years.

The study also drew attention to a rising prevalence of “rental stress”, especially among low-income households. Households whose rental costs are more than 30 per cent of disposable income are deemed to be in rental stress. The Reserve’s paper shows more than three-quarters of renting households in the lowest 20 per cent of income earners were in that stressed category in 2016.

“In aggregate, rents have grown broadly in line with household incomes, although rent-to-income ratios suggest housing costs for lower-income households have increased over the past decade,” the paper said.

The latest census revealed an increase in the proportion of households in rental stress in all capital cities, except Darwin, between 2011 and 2016.

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