Housing affordability improves, but first home-buyers still missing in action

Housing affordability on the rise.

The Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report for the September quarter 2013 recorded an improvement in housing affordability with the proportion of income required to meet loan repayments decreasing 1.2 percentage points to 29.8%.

Compared to the same quarter of the previous year, the figure fell 3.5 percentage points. All states and territories recorded improvements over the quarter with the largest improvement in affordability in Tasmania, where the proportion of income required to meet loan repayments dropped by 1.6 percentage points to 24.6%.

Damian Percy, General Manager of Adelaide Bank said: “The continued improvement in housing affordability is a welcome result for aspiring home owners. Low interest rates and modest rises in family incomes have combined with relatively stable average loan sizes in many parts of Australia to maintain the trend of the last three years”.

“Despite some of the headlines we see about frenzied auction bidding in the inner cities, for those prepared to look carefully and live in the middle and outer suburbs, there are still plenty of housing opportunities for people.

“This is particularly the case in the capital city apartment markets and for three bedroom houses in cities such as Brisbane, Adelaide, Canberra, Perth and Melbourne.

“Less pleasing and of genuine concern is the very low level of first home buyer activity over the most recent quarter. First home buyers remain a strong indicator of the underlying health of the Australian housing market . Their absence over recent months suggests that although affordability is improving, it needs to improve further.

“Improving housing affordability must remain the focus of both governments and industry participants. At Adelaide Bank, we understand that the best way a bank can contribute to improving housing affordability is to keep the cost of lending as low as possible.

“Adelaide Bank also believes in the value of good advice, which is why we partner with Australia’s growing network of professional mortgage brokers to offer great value home loans that can assist people into housing as cheaply as we can – and with as little stress as possible”, Mr Percy concluded.