Cheaper homes increasingly scarce

CoreLogic RP Data analyst Cameron Kusher said that 37.9 per cent of capital city homes were sold below $400,000 over the 12 months to August 2014, down 6.2 per cent from the previous year.

Research by CoreLogic RP Data showed that 37.3 per cent of houses and 45.7 per cent of units sold for less than $400,000 in the capital cities over the 12 months to August.

At the same time a year earlier, 42.3 per cent of houses and 48.5 per cent of units sold for less than $400,000.

Mr Kusher said affordable housing supply has sharply reduced over the past two decades, particularly in cities such as Sydney, Melbourne, Perth, Darwin and Canberra.

“Of course, over that time wages have increased, interest rate levels have tended to be much lower and credit has become much more freely available,” he said.

“Nevertheless, the drop in affordable housing across most capital cities has been substantial.”

Mr Kusher said that while borrowing for a mortgage has become easier and wages have grown, the supply of lower-priced homes is driving many lower income earners out of the capital cities.

“As an example, current figures to the 12 months to August 2014 indicate there have been just 16,345 homes sold below $400,000 in Sydney compared to 97,982 home sales in total,” he said.

With home values continuing to rise in Sydney and Melbourne, Mr Kusher said we can expect fewer sales below $400,000 over the next 12 months.