Recent report shows a slight decline in housing affordability nationally.

The September quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows a slight decline in housing affordability nationally with the proportion of median family income required to meet average loan repayments increasing by 0.1 percentage point to 29.5 per cent.

Compared to the corresponding quarter in 2015, the figure decreased by 2.2 percentage points. The report also found that the long term decline in the number of first home buyers continues.

Damian Percy, General Manager, Adelaide Bank said: “The number of Australian first home buyers decreased by 6.7% during the quarter, to 21,825 – a decline of 5.8% compared to the September quarter 2015 and the lowest figure recorded since ABS records began. To give this some sense of perspective, the number of first home buyers for the quarter has dwindled to a figure now equivalent to the number of lions believed to be left in the wild.”

“First home buyers now make up 13.2% of the owner-occupier market with all states and territories recording decreases in first home buyers over the September quarter 2016, excepting Queensland and the Northern Territory. This is the lowest figure since the ABS series was commenced in June 1991 and compares to an average of 18.5 per cent over the period”.

“Better news was that the proportion of median family income required to meet median rents decreased by 0.6 percentage points nationally to 24.2%. Over the quarter, all states and territories recorded improvements in rental affordability with the exception of South Australia.

“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 Percy concluded.

Fast Facts

• The average loan size to first home buyers increased by 1.5% over the September quarter – a 0.4% decrease compared to twelve months ago, to $319,633.
• The total number of loans (excluding refinancing) decreased by 6.3% over the September quarter, to 105,314. This represents a 5.3% decline compared to the same quarter of the previous year.
• Over the September quarter, the weighted average capital city median house price increased by 1.4% to $712,776. The median house price increased in Sydney and Melbourne while the rest of the capital cities recorded decreases. Compared to the corresponding quarter of the previous year, the figure increased by 2.2%.

Better news for renters

The September quarter brought better news for renters. The proportion of the median family income required to meet median rents decreased by 0.6 percentage points to 24.2%. Over the quarter, all states and territories recorded improvements in rental affordability with the exception of South Australia where the proportion of income required to meet median rents increased by 0.4 percentage points.

A tale of two cities

New South Wales, driven mostly by Sydney is the least affordable state or territory in Australia in which to rent a property. The State’s proportion of income required to meet rent repayments is 28.1% – 3.9 percentage points higher than the national level. The Australian Capital Territory (Canberra) remained the most affordable state or territory in which to rent a property with the figure declining to 17.3%.

Across the nation: Victoria tops for First Home Buyers

Victoria:

Of the total number of Australian first home buyers that purchased during the September quarter, 30.3% were from Victoria, however, the number of loans to first home buyers in Victoria decreased by 10.8%, to 6,611. This represents a 2.1% decrease compared to the September quarter 2015. In Victoria, first home buyers make up 14.7% of the State’s owner-occupier market

NSW:

With the proportion of income required to meet loan repayments 6.0 percentage points higher than the nation’s average, New South Wales remained 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 September quarter, 18.2% were from New South Wales. The number of loans to first home buyers decreased by 11.2% to 3,968. When compared to the September quarter 2015, the number of first home buyers decreased by 14.7%. First home buyers make up only 7.9% of the State’s owner-occupier market – the lowest level across the nation.

Queensland:

Of all Australian first home buyers over the quarter, 24.3% were from Queensland while the proportion of first home buyers of the State’s owner-occupier market was 16.0%. The average loan size to first home buyers increased by 4.1% meaning that Queensland recorded the largest quarterly increase in the average loan size across Australia.

South Australia:

The number of loans to first home buyers in South Australia went down by 14.0% to 1,230. The State had a 4.2% decrease when compared to the September quarter 2015. Of all Australian first home buyers over the quarter, 5.6% were from South Australia while the proportion of first home buyers of State’s owner-occupier market was 10.3%. South Australia was the only state or territory to record a decline in rental affordability over the quarter with the proportion of income required to meet rent payments increasing by 0.4 percentage points over the quarter, to 22.4%.

Western Australia:

Western Australia recorded a 5.5% decrease in the number of first home buyers. The figure is 15.6% lower compared to the same time last year – the largest annual drop across the nation. At 20.3%, the State has the highest proportion of first home buyers in percentage terms of the owner-occupier market across Australia.

Tasmania:

The number of first home buyers in Tasmania decreased by 13.4%. This is an increase of 21.6% compared to the same quarter of the previous year. The average loan to first home buyers went up by 1.4% over the quarter, to $243,333. Despite the decrease in first home buyers and relatively low numbers, Tasmania had the largest annual increase in the total number of new loans across the country with a 9% increase.

Australian Capital Territory:

The Australian Capital Territory recorded an 11.3% decrease in the number of loans to first home buyers. When compared to the September quarter 2015 the figure decreased by 4.6%. During the third quarter 2016, first home buyers made up 14.1% of the Territory’s owner-occupier market with the average loan for first home buyers sitting at $323,167. The National Capital remains the most affordable state or territory in which to buy a home or rent.

Northern Territory:

The number of loans to first home buyers in the Northern Territory went up by 14.3% which was a 32.1% rise compared to the September quarter 2015. The proportion of first home buyers of the Territory’s owner-occupier market was 15.9%. The average loan size to first home buyers decreased by 5.8% over the quarter.

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