Declining interest rates and rising income spur improving housing affordability
A new report released last week shows an improvement in overall housing affordability over the June quarter with the positive development seen in seven out of eight Australian states and territories.
The latest edition of the Adelaide Bank/REIA Housing Affordability Report, released last week by the Real Estate Institute of Australia, provides a comprehensive update for the sector using the latest data for the June Quarter 2019.
REIA President Neville Sanders says, “The latest Adelaide Bank/REIA Housing Affordability Report shows that the proportion of median family income required to meet average loan repayments was 30.3%. The figure decreased 0.5 percentage points during the quarter and 0.6 percentage points compared to a year ago largely supported by declining interest rates and rising income.”
“New South Wales was the only state or territory to record a decline in housing affordability and kept the title of the most unaffordable state or territory for home buyers while the Australian Capital Territory had the smallest proportion of median income required to meet average monthly loan repayment across the country. South Australia recorded the best quarterly improvement in housing affordability nationally as a result of a fall of the average loan size.”
“The Australian Bureau of Statistics made revisions to the original series as a result of improved reporting of survey and administrative data, and updated first home buyer modelled estimates.
Despite the revision, it is clear that first home buyers’ presence on the market is still low compared to the long-term average. In the Northern Territory, the proportion of first home buyers on the owner-occupier market is just above 12.0% with the Territory recording the largest annual drop in the number of first home buyers across the country.”
“The report shows rental affordability also improved over the quarter with 25.0% of median income now required to pay median rents. The Australian Capital Territory, Tasmania, Western Australia, Queensland and Victoria recorded improvements.”
“Although this quarter the report delivered good news to both home owners and renters, we would like to see the pattern established –there has been much fluctuation over the past twelve months,” concluded Mr Sanders.