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Higher home mortgage rates have sent the number of households in mortgage stress soaring since the Census was taken in August last year, according to the Housing Industry Association (HIA).
Based on research from the National Centre for Social and Economic Modelling (NATSEM), the HIA has found that 33.2% of all owner-occupiers are in mortgage stress, up from 28.5% in August of last year. In Sydney, more than 41% of home buyers are now in mortgage stress.
According to the Australian Bureau of Statistics, in August 2006 there were 547,000 households in mortgage stress - that is paying more than 30% of their gross household income on a single mortgage over their place of principal residence. Twelve months later the number of households in mortgage stress has escalated by nearly 14% to more than 620,000, an increase of 77,000 households.
According to HIA, more than eight out of 10 households in mortgage stress had a household income of less than $75,000 a year, dispelling the myth that the incidence of mortgage stress has been distorted by high-income households taking out big mortgages. Australian families are not keen to get into mortgage stress, many have little choice.
A high rate of mortgage stress was among householders under 35 years of age indicating that mortgage stress is more prevalent among recent first home buyers.
With first home buyers having to borrow more then ever to enter the market, family budgets are vulnerable to increases in home mortgage rates. For a family on average earnings, income would have had to increase by more than 8%in the past year to avoid an increase in repayment burdens.
Average Australians are being squeezed out of home ownership, and the rental market is offering little relief as vacancy rates are at all-time lows and rents are increasing much faster than general inflation.
The incidence of mortgage stress in capital cities has increased by nearly 16%, or 55,000 households, in 12 months.
The housing affordability crisis requires governments to work collaboratively to address what is a fundamental lack of affordable housing stock. There is an urgent need to address supply constraints because without an increase in the availability of affordable housing the situation will get worse.
As of August 2007, top three Australian regions with high Mortgage Stress rates are Sydney (41.1%), Melbourne (32.2%) and rest of New South Wales (31.6%). And top three regions with recorded maximum growth in Mortgage Stress rate compared with December 2006 census are Hob (40.8%), Brisbane (25.8%), and Rest of Victoria (19.4%).
21-Aug-2007
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