Affordability is stretched to the limit
Rapidly rising house prices are typically associated with larger mortgage borrowing. The average new mortgage taken out for a home purchase did rise to $450,000 between January and April, but this has subsequently declined to a $413,000 average for May-September 2022, not that far above the $403,000 average for the whole of 2021. This indicates homeowner equity has been rising significantly as a proportion of the funds used to make a home purchase.
Yet the challenges for first-time buyers to save for a deposit are mounting, especially with surging inflation squeezing spending (and saving) power. Falling equity markets and tumbling bond prices are further hampering new buyers’ ability to build enough for the required deposit. Homeowners looking to trade up are in a better position, already partially owning an asset whose price is moving in the same direction, but it certainly…
