March Quarter shows improved housing affordability

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The March quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows an improvement in housing affordability nationally, with the proportion of median family income required to meet average loan repayments decreasing by 0.3 percentage points to 31.3 per cent.

The number of first home buyers decreased by 14.5 per cent during the quarter, but year on year there was actually a 28% increase compared with the March quarter 2017.

Rental affordability declined slightly with the proportion of income required to meet average rental payments increasing to 24.8% or a quarterly increase of 0.3 percentage points.

Darren Kasehagen, Head of Distribution, Adelaide Bank said: “The improvement in housing affordability nationally is to be welcomed and it is great to see that when compared to the corresponding quarter of 2017, the number of first home buyers has increased in all states and territories year on year – and by more than 80% in NSW and the ACT.

“The reduction in the total number of new loans compared to the same quarter last year has the potential to be a continuing trend, and the same could be said for the reduction in the average loan size experienced in the March quarter as overall lending standards improve across the industry making access to credit a little harder.

“At Adelaide Bank, we are open for business and looking to help borrowers across all states and territories in all market segments – be they first time buyers, existing customers, owner occupiers or investors.

“Wherever you decide to live, Adelaide Bank’s continuing and widely recognised contribution to improving housing affordability is to keep the cost of lending as low as we can, while providing great service through Australia’s growing network of mortgage brokers,” Mr Kasehagen concluded.

Fast Facts: Across the nation

Victoria:

Of the total number of Australian first home buyers that purchased during the March quarter, 8,169 were from Victoria. The number of loans to first home buyers decreased by 17.9% for the quarter but increased 35.3% year on year. First home buyers now make up 28.4% of the State’s owner-occupier market. Rental affordability declined slightly with a 0.2% increase for the quarter with 23.8% of income required to meet median rents.

NSW:

The proportion of family income required to meet loan repayments decreased by 1.3% to 36.5%. New South Wales remains the least affordable State or Territory in which to buy a home. Of the total number of Australian first home buyers that purchased during the March quarter, 24.6% were from New South Wales. First home buyers now comprise 22.4% of the State’s owner-occupier market. Rental affordability declined for the quarter with an increase of 0.4%. 30.1% of income is now required to meet median rents.

Queensland:

The proportion of income required to meet home loan repayments decreased to 27.5%, a 0.1% decrease over the quarter. Of all Australian first home buyers 21.3% or 5,639 were from Queensland – a decrease of 14.7%.   The proportion of first home buyers in the State’s owner-occupier market was 26.7%. Rental affordability declined slightly with an increase of 0.4% to 23.1% of income required to meet median rents.

South Australia:

South Australia recorded a decline in housing affordability with the proportion of income required to meet monthly loan repayments increasing to 27.2% or 0.8% over the quarter.  In the national breakdown, 4.9% of first home buyers were from South Australia while the proportion of first home buyers in the State’s owner-occupier market recorded a decrease of 13.7%.  Rental affordability declined by 0.5 percentage points to 22.4% of income.

Western Australia:

The number of first home buyers in Western Australia decreased by 10.5% over the quarter.  13.5% of all Australian first home buyers were from Western Australia. Housing affordability improved with the proportion of income required to meet loan repayments decreasing to 23.6%. This was a 0.3 percentage point decrease.  Rental affordability improved to 16.3% of income, a year on year decrease of 1.3%.

Tasmania:

Housing affordability in Tasmania improved with the proportion of income required to meet home loan repayments decreasing to 24.5%, a decline of 1.2 percentage points over the quarter or 0.9 percentage points year on year. Rental affordability in Tasmania declined with the proportion of income required to meet median rents increasing to 28.1%, a 1.3% increase or 1.5% year on year.  First home buyers in Tasmania decreased by 5.0% over the quarter but year on year recorded a 6.9% increase.

Australian Capital Territory:

Housing affordability in the Australian Capital Territory declined slightly with the proportion of income required to meet home loan repayments increasing to 19.7%, a 0.1% percentage points over the quarter or a decrease of 0.4% compared to the same quarter last year. Rental affordability also declined. The proportion of income required to meet the median rent is now 18.5%, an increase of 0.3% for the quarter or 0.6% year on year.

Northern  Territory:

Housing affordability in the Northern Territory improved with the proportion of income required to meet loan repayments decreasing to 19.8% for the quarter or 1.1 percentage points. This was a decrease of 1.3% year on year.   Rental affordability in the Northern Territory improved with the proportion of income required to meet the median rent decreasing to 22.5% or 0.6 percentage points over the quarter. This was a decrease of 1.2 percentage points year on year.

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