Housing Affordability

The Hon. D.G.E. HOOD (14:30): My question is to the Treasurer. Will the Treasurer update the chamber on housing affordability in South Australia?

The Hon. R.I. LUCAS (Treasurer) (14:30): The issue of housing affordability, given recent developments in the housing industry nationally and in South Australia, has attracted a lot of media comment for obvious reasons. Not only in South Australia but nationally we have seen significant increases in housing prices. The increased demand in relation to the HomeBuilder scheme and other associated stimulus measures have added considerable pressures to the housing market, including for those who own homes the attraction of seeing the value of their asset rise and rise significantly over the recent time period and, for those who don't, an increasing challenge in relation to housing affordability.

Therefore, I think it is worthwhile for members to be aware of the recent analysis done by the Housing Industry Association about housing affordability in Australia. The Housing Industry Association are accepted I think by all political parties as being independent analysts and commentators on the state of the housing market over a very long period of time. They have for many years produced a housing industry affordability index for every capital city in the nation.

Their most recent report, for the March quarter just concluded, shows, as has been evident from some of the public commentary, that housing affordability has fallen in all of the capital cities in the March quarter, primarily, as I said, as a result of the price of a typical home in all capital cities rising faster than the capacity of borrowers to repay a typical loan, even with the advantages in recent years of historically low interest rates.

However, what I think is of great interest I am sure to all members in terms of the affordability index is that the Housing Industry Association concludes that Adelaide retains the rank of the third most affordable capital city in the nation, trailing behind Darwin and Perth but certainly significantly more affordable than our Eastern States colleagues, in particular Sydney, Melbourne and to a lesser degree Brisbane as well. So in terms of the housing industry affordability index, put simply the index for Adelaide measures 98.2, and the index for Sydney is 63.1 and for Melbourne is 74.1, so affordability for South Australian prospective home owners and households is significantly more affordable.

The other thing I would place on the public record is they have the advantage of being able to compare their affordability index for Adelaide this year, March 2021, with the affordability index for five years ago, March 2016. That shows that even with the recent trend in the last quarter or two quarters, the housing affordability index in Adelaide is much better now than it was five years ago.

Five years ago, the HIA's independent index had Adelaide at 90.7. That affordability index has improved now to 98.2 over the last five-year period. So I think it's useful to bear in mind that, whilst there are recent pressures as a result of a significant increase in home prices, relative to the last five years or over the last five-year period affordability, as measured by the Housing Industry Association, has significantly improved—over the last five-year period, from March 2016 to March 2021.