Portion of income to service a loan or rent payment in Canberra increases, ANZ and CoreLogic's Housing Affordability Report shows

ANZ and CoreLogic's Housing Affordability Report, released today, shows affordability has worsened for both renters and home owners in Canberra.

The latest June quarter results reveals the portion of income required to service a new mortgage in Canberra was 36.8 per cent, up from 34.3 per cent in the March quarter.

In March 2020, Canberrans were only required to put 26.2 per cent of their income towards their mortgage.

Meanwhile the report found Canberra renters sacrificed 27.3 per cent of their income for rent, up slightly from 27 per cent in the March quarter and 25 per cent pre-COVID.

One housing metric did improve, however, as dwelling values in the capital have begun to fall in recent months.

The time it takes to save for a home deposit in Canberra fell slightly to 9.5 years, from 9.6 years in the previous quarter. Pre-COVID, Canberra buyers took an average of seven years to save for a deposit.

ANZ senior economist Felicity Emmett said while it is likely measures of affordability - such as the time taken to save for a deposit - will improve if property values continue to fall, there are other pressures mounting for prospective buyers.

"... we've had very large increases in food prices, petrol prices are up a lot, electricity prices are up. All of these price rises have been in sort of the non-discretionary category so that's eating into households' disposable income," she said.

"And also for someone saving for a deposit, we've seen very strong rises in rents so all of that is making saving actually even more challenging.

"So while there might be some small chinks of light around the deposit hurdle and affordability there, I think we need to see that in the context of some of the other challenges that prospective buyers are facing at the moment."

Anecdotally, real estate agents have reported prospective tenants in some markets inquiring about the rental availability of recently sold properties in the hope of securing a rental before it is listed.

"These conversations have also revealed some tenants are offering months of rental payments in advance, to try and secure a lease," the report said.

"The increase in cost pressures for renters is particularly worrying, given that renters tend to have lower incomes than owner-occupiers, and face persistent affordability challenges in trying to attain home ownership."

The report stated renters with high savings may be prompted to buy, give the current environment of falling property prices across the nation.

"For lower income renters with little savings, the months ahead will be a particularly challenging time, which may lead to more shared accommodation, and a gradual re-adjustment of average people per household," the report said.

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