(The following statement was released by the rating agency)Link to Fitch Ratings' Report: Asia-Pacific Structured Finance Chart of the Month – June 2016https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884220SYDNEY, June 30 (Fitch)
Housing affordability for first-home buyers is at its most expensive on record in Sydney and Melbourne and remains high in other Australian capitals, despite housing-loan serviceability at its cheapest since 2003. Fitch expects first-home buyers to remain a diminishing part of the Australian housing sector, in the absence of a policy response to reduce house prices or subsidise first-home buyers' entrance into the market.
Home values have rapidly increased in recent years. Low interest rates have been a significant driver, as borrowers are able to service larger loan balances and existing owners can access equity in their properties to purchase investment properties. These factors have acted as a barrier to entry for first-home buyers.
Fitch has calculated a "Deposit to Income" ratio to measure the difficulty for a first-home buyer to enter the market. Sydney's ratio reached a new high of 120.2% in December 2015, above the previous high of 110.6% in 2004.The proportion of first-home buyers in New South Wales and Victoria shows a negative correlation to the deposit-to-income ratio. First-home buyers are being squeezed out of Sydney and Melbourne because of high deposits required relative to income.
The full report, which is part of Fitch's "Asia-Pacific Structured Finance Chart of the Month" series that highlights topical issues in the region, can be found at www.fitchratings.com or by clicking the link in this media release.
Contacts:Brenden Asplin, CFAAssociate Director+612 8256 0340Fitch Australia Pty Ltd. Level 15, 77 King Street, Sydney, NSW 2000Ben McCarthyManaging DirectorStructured Finance+612 8256 0388Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.Additional information is available on www.fitchratings.com
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