The December quarter edition of the Adelaide Bank and Real Estate Institute of Australia’s Housing Affordability Report gave disheartening news for those looking to enter the residential property market.
The report revealed the Australian median house price had increased by 3.5 per cent over the quarter to $641,457.
Compared to the 2013 December quarter, that figure has risen by 6.6 per cent
The proportion of income required to meet loan repayments increased by 1.1 per cent to 31.5 per cent nationally, an increase of 0.7 per cent to the corresponding quarter in 2013.
Tasmania showed the most noticeable change, with the proportion of income required to meet loan repayments rising 1.5 per cent, to 25.9 per cent in the December quarter.
New South Wales remains the least affordable state for homebuyers with the proportion of income required to meet home loan repayments sitting at 36.2 per cent, which is 4.7 per cent higher than the national average.
Victoria’s proportion of income required to meet loan repayments increased by 1.5 per cent to 33.4 per cent – making it the worst annual decline in affordability across Australia.
Housing affordability also worsened in Queensland, with the proportion of income required to meet home loan repayments gaining 0.3 per cent during the quarter and 0.5 per cent over the last 12 months, increasing to 28.4 per cent.
In South Australia and Western Australia the report showed the proportion of income required to meet monthly loan repayments at 27.8 per cent and 26.1 per cent respectively, while in the Northern Territory, 28.1 per cent.
The Australian Capital Territory remains the most affordable state or territory to buy a home, despite also recording a decline in housing affordability.
In the ACT, the proportion of income required to meet home loan repayments rose by 1 per cent, to 20.4 per cent.
“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,” Adelaide Bank general manager Damian Percy said.
“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 14 April,” Mr Percy said.
Meanwhile the December quarter showed the number of new finance commitments to first home buyers increased in New South Wales, Victoria, the North Territory and the ACT.
Queensland recorded no change while South Australia, Western Australia and Tasmania had decreases.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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