From The Real Estate Conversation.
The March quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows housing affordability improved across the country, but the number of first home buyers decreased in all states and territories.
The proportion of family income required to meet loan repayments decreased by 1.3 percentage points during the March quarter to 30.4 per cent. The result was 1.3 percentage points lower than for the corresponding quarter in 2016, showing affordability is improving.
REIA President Malcolm Gunning said first-home buyers make up only 13.4 per cent of total owner-occupied housing. The rate of first-home buyers has been on a downward trend for more than five years.
Damian Percy, general manager Adelaide Bank, said, “While the improvement in housing affordability for the March quarter is to be welcomed, we are still in the midst of a housing affordability crisis and we need to treat it as such. Recent measures by governments to assist first home buyers are similarly welcomed, but the reality is that it will take years for these policy measures to wash through the system and translate into meaningful price action.”
“The number of first-home buyers decreased to 20,677 over the March quarter – a drop of 11.2%,” said Percy.
Percy said the nation’s housing affordability crisis was having a “profound impact” on the “economic and social well-being of the nation.”
Gunning said, “It will be interesting to see the effects that stamp duty exemptions and concessions announced in Victoria and more recently in NSW have on first home buyers.”
“We anticipate that more first home buyers will be enticed to enter the market place. However, it will take time for any response to filter into our data as the changes do not come into effect until 1 July 2017,” Gunning said.
Over the March quarter, the proportion of median family income required to meet rent payments increased by 0.1 percentage points to 24.6 per cent. However, the results varied across the states and territories, with rental affordability improving slightly in New South Wales, South Australia, Western Australia, and the Northern Territory.
Fast facts from the Adelaide Bank/REIA Housing Affordability Report
The average loan size to Australian first home buyers is now $372,620 – a decrease of 4.3 per cent over the March quarter but an increase of 2.3% compared to last year.
Victoria is the state with the largest number of first-home buyers. First home buyers now make up 21.6% of the state’s owner-occupier market.
Median rents increased slightly, meaning that during the March, rental affordability declined slightly. The proportion of family income required to meet median rents increased by 0.1 percentage points to 24.6 per cent.
Rental affordability declined for the quarter with an increase of 0.5% of income required to meet median rents.
In NSW, the proportion of family income required to meet loan repayments is 5.7% higher than the nation’s average. NSW remains the least affordable state or territory in which to buy a home. First home buyers now make up only 12.3% of the state’s owner-occupier market – the lowest level in the country. Rental affordability declined for the quarter with an increase of 0.5% of income required to meet median rents.
In Queensland, the proportion of income required to meet home loan repayments decreased to 26.7%, a 1.3 percentage point drop over the quarter. The proportion of first home buyers in the state’s owner-occupier market was 23.9%. Rental affordability declined slightly.
The proportion of first-home buyers in South Australia‘s owner-occupier market recorded an increase to 16.8%. Rental affordability improved by 0.2 percentage points.
Western Australia recorded a 6.5% decrease in the number of first-home buyers over the quarter. The proportion of first home buyers in the state’s owner-occupier market was 31.5%. Rental affordability in Western Australia improved during the March quarter with the proportion of family income required to meet the median rent decreasing 0.5 percentage points to 18.6%.
The number of first-home buyers in Tasmania decreased by 7.5% for the March quarter or 11.1% compared to the same quarter of 2016. The average home loan size to first home buyers increased by 5.6% to $240,333. Rental affordability declined with an increase of 1.3% for the quarter.
The Australian Capital Territory recorded an 18.2% decrease in the number of loans to first home buyers. First home buyers made up 17.8% of the Territory’s owner-occupier market. Rental affordability declined for the quarter. The National Capital remains the most affordable state or territory in which to buy a home or rent.
The number of loans to first-home buyers in the Northern Territory decreased by 15.8%. The proportion of first home buyers in the Territory’s owner-occupier market was 19.8%. Rental affordability improved with a decrease of 0.8%.
