Reports are in – housing affordability needs more than lip service
Housing affordability on the decline.
The December quarter edition of the Adelaide Bank/ Real Estate Institute of Australia Housing Affordability Report contains disappointing news for many seeking entry to the Australian residential property market. This edition records a drop in housing affordability nationally and the proportion of family income required to meet loan repayments has increased by 1.1 percentage points to 31.5%.
Damian Percy, General Manager, Adelaide Bank said: “Encouraging home ownership should be a priority for any home lender and Adelaide Bank is committed to working with the REIA to contribute to the development of public policy that can help ease the supply side problems currently putting pressure on housing affordability.
“Construction of new residential dwellings may be at the highest levels for some time, which is encouraging and certainly helping to get our economy moving again, but unless a more determined effort is made on the part of the States and Commonwealth to work more actively with local government, developers and financiers – as the economy improves and population continues to grow at current rates, there will continue to be supply-side issues that will ultimately mean further upward pressure on house prices.
“It’s no secret that land supply is still a major problem and biases exist in the system often preventing the building of new homes in the places where most people want to live. Looking to the future and given the usual pace of reform, housing affordability is a problem that needs to be addressed to counter negative longer term outcomes in other areas such as retirement savings adequacy.
“Quarterly studies such as the ASFA Retirement Standard assume that people own their own homes when calculating the amount needed each week for a comfortable life in retirement. While the December quarter finds that rental affordability has improved to levels not seen since 2009, levels of home ownership have not.
“Land may be short in Melbourne and Sydney, but we should be thinking more creatively. For example, opportunities exist for airspace to be better utilised. Governments already own the land and could work with the private sector around areas such as railway stations to both improve car parking and provide construction rights with a caveat that a percentage of dwellings be set aside for essential services workers.
“Adelaide Bank’s continuing and widely recognised contribution to improving housing affordability is to keep the cost of lending as low as we can and to provide great service through Australia’s growing network of mortgage brokers.
“The rising chorus of voices and release of studies such as the Grattan Institute’s book City Limits this week will ensure that the affordability debate is one that exercises the minds of our policymakers for some time to come, but as an issue, we need less talk and more action at all levels of government.
“Adding to the debate calling for improvements to policy needed to increase housing affordability will be the report into Housing Affordability by the Senate Economics References Committee, delayed for release, but due to be tabled next month on April 14 “, Mr Percy concluded.
Fast Facts from the latest Adelaide Bank/REIA Housing Affordability Report
Australian Capital Territory
The ACT remains the most affordable state or territory in which to buy a home or rent
Northern Territory
The NT has the largest proportion of first home buyers in the nation’s owner occupier market.
Tasmania
Tasmania continues to have the smallest average loan size, however the state’s quarterly increase was the nation’s largest.
NSW
NSW is the only state or territory with the average loan size above the $400,000 mark
Victoria
Of all Australian first home buyers, 27.7% are from Victoria.
Queensland
In Queensland, 28.4% of the median family income was required to meet average monthly loan repayments in the December quarter of 2014.
South Australia
In SA, the proportion of the median family income required to meet median rent was 22.6% in the last quarter of 2014.
Western Australia
During the quarter, the average monthly loan repayment in WA was $2,158.
