KY Accountancy

02/06/2026

Why housing affordability is not as bad as it seems for homebuyers

By Gerv Tacadena 25 MAY 2018

While it is true that prices have already jumped significantly over the recent decades, the relationship between housing costs and disposable income has remained stable over the past twenty years.

For Australian National University associate professor Ben Phillips, this could mean that the housing affordability may not be as bad as news reports are suggesting.

In a commentary for The Conversation, Phillips said housing affordability looks quite different if the actual costs relative to income are taken into consideration.

Housing costs last shot upwards between 1984 and 1993 due to a combination of weak income growth and strong costs appreciation – particularly in mortgages as a result of high interest rates.

"Since peaking in 1993 costs remained relatively stable with rents increasing modestly over the past 10 years, while mortgage costs declined," Phillips said, adding that the share of costs in disposable income has since lingered around 16% according to the Australian Bureau of Statistics.

Also Read: What are the merits of solving Australia's housing affordability crisis?

Considering different income brackets, Phillips said both the lowest income and the highest income households have been allocating a lesser portion of their disposable income for housing costs as middle-income households have modestly increased their spending.

Phillips said housing affordability can also be ascertained using housing stress. For this, the rule of thumb is to use the 30/40 stress rule, which defines a household being in stress if they allot more than 30% of their income on housing costs, or if they are in the bottom 40% of income distribution.

"Using this housing stress measure, we see a significant increase in renter stress, firstly between 1984 and 1993 and then from 2007. Mortgage stress is largely unchanged since 1988 following an increase between 1984 and 1988," Phillips said.

As such, affordability stress is suffered more by renters.

"While elevated house prices are a concern, the more pressing social problem for Australia remains the lack of affordable rental housing for lower-income families that is close to jobs and services in our capital cities," he said.

02/06/2026

Quotes of the day

Winning is not a sometime thing; it’s an all time thing. You don’t win once in a while, you don’t do things right once in a while, you do them right all the time.Winning is habit. Unfortunately, so is losing.
-Vince Lombardi

02/06/2026

ASX to rise, ahead of 'record' contraction for Australia's economy Top business news for you selected by KY

Australian shares jump as the nation suffers its worst economic contraction on record, while the Australian dollar slips from its two-year high.

01/06/2026

Mortgages and break-ups: Some practical tips when separating

Breaking up is hard to do. On top of the emotional impact, there are practical ramifications as well.

When there’s a separation or divorce, debts you’ve accrued during the relationship unfortunately don’t go away. The longer a couple is together, the harder it can be to unravel all the financial connections.

Here we outline some of the issues facing both de facto and married couples when dealing with what is usually their most significant debt: the mortgage. Used alongside professional legal and financial advice, it’s possible to make this difficult transition a little less stressful.

Get advice from the experts

The end of a relationship is one of life’s most stressful events. You don’t have to handle it alone – there’s emotional, legal and financial support out there.

Counselling

Visit a counsellor to work through the emotional weight of breaking up – it’s hard to make decisions when you’re angry or sad. You may want to access a Family Dispute Resolution (FDR) mediator to assess whether both parties are emotionally ready to negotiate on money matters, and to help resolve disputes.

Legal advice

Lawyers who specialise in family law can provide legal advice. Initially, they can advise whether you’re eligible for legal aid, and help with timelines and deadlines for your property settlement. Importantly, they should help you to set realistic expectations.

Financial advice

Talk to your lender or broker to understand the current state of your mortgage, and to learn what options are available regarding mortgage repayments. You may be able to defer payments, giving you time to get back on your feet. Your lender or broker can also help you review your finances before you decide whether you can refinance and take on the mortgage yourself. It’s a sad fact, but they’ve probably dealt with this situation before.

Sort out your living arrangements

Some separating couples are able to continue living in the same house, while for others that simply isn’t possible. If one of you needs to move, sort that out first, before turning your attention to the mortgage. Again, financial advisors, lawyers and brokers can help you plan a budget and figure out how your mortgage will be paid until you sell or settle.

Settle your finances

When you divorce or separate, your assets will be divided. To help you understand your financial situation, have all your documentation at hand – bank statements, tax returns, superannuation, and so on. With professional advice, you can figure out your assets and liabilities, what each person is entitled to, and whether one of you can afford to take on the mortgage alone, or if you have to sell.

One option: Sell the property

You might decide to sell your property, divide any assets and move on. The first step is to have your property appraised so you know the market value. From there you can figure out your total equity. For example, if your house is appraised at $800,000 and you owe $200,000 on the mortgage, your equity is $600,000.

Things can become complicated if there’s a disagreement about how and when to split your assets and liabilities. Legal expertise or a mediator may be needed.

Another option: Sell to your partner, or buy them out

If one of you wants to remain in the house, it might be possible for that person to refinance the mortgage and take it on alone, depending on their income and other assets. This is sometimes the preferred option if there are children involved.

Again, agreement must be reached on the value of the property and whether it’s a 50-50 split. Professional property valuers, financial advisors and lawyers are all able to provide advice and information.

It’s difficult figuring out who gets what and when, but getting the right legal and financial advice can help you both break up the mortgage and move on with your lives.

Relationships Australia’s A Fair Share provides a good summary of your options and of the Family Dispute Resolution process. You can also get great information on the legal process from the Family Court of Australia.

01/06/2026

"So, what if, instead of thinking about solving your whole life, you just think about adding additional good things. One at a time. Just let your pile of good things grow."

01/06/2026

COVID recession confirmed as Australia's economy posts its biggest fall on record Top business news for you selected by KY

Australia is officially in its first recession for almost three decades, with the June quarter GDP numbers showing the economy went backwards by 7 per cent — the worst fall on record and a second straight contraction.

29/05/2026

Brisbane developer is offering apartments on a deferred settlement basis

- By Michael Mata 13 MAR 2018

Reed Property Group is offering the 20 remaining apartments in its Belise project in Brisbane’s Bowen Hills on a deferred settlement basis to help investors trying to navigate the difficult financial environment, according to Richard Ash, non-executive director for Reed Property Group.

Under the plan, buyers who pay a deposit of $60,000 or more can acquire a unit and pay monthly lease fees (equivalent to rent). They can settle in five years when the developer plans to hand over the title, Ash told The Australian Financial Review.

Reed has already paid back its debts on the project, and added that it was changing its offer to meet current market needs.

“The world has changed. There is no doubt the availability of debt for home owner-occupiers and investors has changed. Purchasers will find it easier to refinance or get finance in five years’ time,” Ash said.

Regulator-mandated credit curbs for investors, and an oversupply of new units in the Brisbane CBD and inner suburbs, have softened prices and sent vacancy rates soaring. Nevertheless, unit prices are projected to rise within the next five years, by which time buyers would be looking to secure financing.

“We think there may be some downside left but probably not a lot,” Ash said. “We’re very comfortable that in the next three to five years there is upside in those prices.”

29/05/2026

Don't forget you're human. It's Okay to have a meltdown. Just don't unpack and live there. Cry it out. Then refocus on where you're headed.

29/05/2026

Facebook and Google are fighting for control of their 'special sauce' and they may take the nuclear option Top business news for you selected by KY

With the rest of the world watching, Google and Facebook do not want a precedent set in Australia over access to the data they gather on users. And it's too late for the Government to back down now, writes David Speers.

28/05/2026

Navigating your first home loan application

Although applying for your first home loan may be the biggest financial decision you’ll make, it doesn’t need to be an overwhelming one. With the right preparation, a realistic understanding of your financial position and some professional guidance from a good mortgage broker, you can position yourself as an attractive first home loan customer and be approved in no time.

Clean up your credit

Before applying for your first home loan, make sure you are creditworthy in the eyes of a lender by obtaining a copy of your personal credit file. Your credit history will be a key factor that a lender will consider when deciding to process your loan application.

If you have a history of credit defaults, be prepared to explain honestly and up-front to the lender why those defaults occurred, how you remedied the situation and how you’ve taken steps to ensure the situation will not repeat itself.

Check your financial position

It’s also important to conduct a self-assessment of your financial position. This is to ascertain the amount you can borrow and the ease with which you’ll be able to manage your repayments.

Try creating a spreadsheet of your income, expenses, assets and liabilities. Make sure you are honest with yourself about your everyday living expenses and commitments. Your home loan repayments should equate to no more than a third of your income, give or take your expenses.

Then consider the ancillary costs of buying a home and getting a loan, such as legal fees, lender establishment fees, stamp duty (if no government concession applies) and so on. You may also want to look into the availability of any available government concessions or grants that may help reduce the overall cost.

A mortgage broker can help you assess your financial position and that of your co-borrowers to ensure the amount you wish to borrow is feasible in your circumstances.

Be deposit-ready

Although it’s true that some lenders don’t require a deposit – or require only a minimum deposit – you may want to aim to have a solid 20 per cent deposit saved up. Also factor in the additional costs of buying a home such as conveyancing, stamp duty and removalists.

Saving a deposit is a good idea for two reasons:

A 20 per cent deposit could mean you do not have to pay for Lenders Mortgage Insurance (LMI). LMI is a premium amount that a borrower must pay to the lender when the loan-to-valuation ratio exceeds 80 per cent. Some lenders may make the loan available without having to get this insurance.

A 20 per cent deposit immediately tells a lender that you are financially disciplined and responsible – attributes that will encourage lenders to look favourably upon your first home loan application.

If you do not have a 20 per cent deposit, don’t despair. A good mortgage broker will provide you with some options to help you find the right loan product.

Do your research

Finding the right first home loan often entails so much more than just interest rates. You should try to research a range of products and investigate their fine print, including any set-up and break fees, loan structures, flexibility options such as redraw and offsetting, repayment options and guarantees.

A good mortgage broker will have expert product knowledge that they can discuss with you to determine what loan would best suit your lifestyle and needs, both now and in the future (for example, when starting a family).

Gather your documents

To facilitate a fast assessment of your loan application, it’s helpful to gather recent copies of your pay slips and evidence of any other income.

Also, gather copies of your bank account statements and credit card statements. If you’ve been employed for only a short time, try strengthening your application by obtaining letters of reference from your current and previous employers. If you are self-employed, a way to show your monthly income, outgoings and cashflow is by having business invoices and receipts on hand in case the lender requires such evidence of your earnings.

Remember that a good mortgage broker can help position you as an attractive borrower to lenders, while finding the best first home loan to suit your needs.

To find out more about getting started on your application, contact your broker today.