Canberra: Australians are having the toughest time in at least three decades affording a home as a combination of elevated interest rates and higher property prices push buyers out of the real estate market.

       A typical or median-income household, earning just over A$105,000 a year, could afford to make loan repayments on just 13% of homes sold in the past year, the smallest share since records going back to 1995 show, REA Group Ltd’s property data business PropTrack said in a report released last Saturday.

       Affordability is tightest in New South Wales, the most populous state, where a typical income household can afford just 7% of homes sold.

       “Household incomes have risen since the pandemic and improved labour market conditions have drawn more people into employment and boosted wage growth,” Angus Moore, PropTrack’s senior economist, said in a statement.

       “However, this has been insufficient to offset higher home prices and, critically, the surge in mortgage rates.”

       The Reserve Bank of Australia (RBA) has raised interest rates by four percentage points since May 2022 as it tries to get control over inflation.

       Yet a combination of a swelling population from post-Covid immigration and a lack of new housing supply has seen property prices rebound even with the cash rate at an 11-year high of 4.1%.

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       The RBA meets today and is expected to keep rates unchanged.

       Servicing a mortgage is only just below the peak reached in 1989, according to PropTrack.

       At that time, the central bank lifted the cash rate aggressively as the economy overheated and ended up tipping Australia into a deep recession.

       Last Saturday’s report showed low- and middle-income groups faced particularly severe affordability issues, with a household earning A$64,000 per year able to afford just 3% of homes. — Bloomberg