Housing in Australia has become "severely unaffordable", and it will take 10 years of flat-lined prices to rectify, a study has found.
The AMP.NATSEM Income and Wealth Report has found median house prices increased 147% over the past decade, while after-tax incomes grew only 50%. In spite of recent declines in prices, average median values are still more than 7.3 times larger than after-tax incomes.
Sydney has reclaimed its place as the least affordable capital city in Australia, followed by Melbourne, Adelaide and Perth. Affordability issues have also spread outside capital cities, with affordability levels in Wollongong, Newcastle, Mandurah and the Gold and Sunshine Coast now on par with the capitals.
The report's lead author, NATSEM principal research fellow Ben Phillips, said affordability issues have led to a growing number of Australians experiencing housing stress. The study defined housing stress as devoting greater than 30% of after-tax income to mortgage or rent payments.
"Housing stress is most strongly felt by those buying a home, with 31% stressed, or those renting, with 30% stressed. Nearly one in 10 buyer households spend at least half their after-tax income on housing, which pushes them into the severely housing stressed category," he said.
The report has predicted it will take at least 10 years of flat house prices coupled with income growth to return housing to an affordable level.