National housing affordability has dipped with the proportion of median family income required to meet average loan repayments increasing by 0.9 percentage points to 30.4 per cent, down 1.9 per cent on the corresponding period last year, according to new figures.
The latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report has also found a 6.6 per cent national increase in the number of first home buyers for the December quarter, 0.5 per cent up on the December 2015 quarter.
General manager at Adelaide Bank Damien Percy said the number of Australian first home buyers increased to 23,273 in the reporting period, which comprised almost 14 per cent of the owner occupier market.
He also said average loan sizes increased in NSW, Victoria, Western Australia and the Northern Territory.
“The bad news is that despite this increase in first home buyer numbers, it is still a figure well below the historical average of 18.5 per cent of the owner occupier market since the early 1990’s,” said Mr Percy.
“Large land releases such as those recently announced in Victoria can be expected to improve opportunities to enter the market.
“Recent public lamentations on the plight facing first home buyers are welcome but one can’t help but think that the traditional unwillingness to confront those voters enjoying structural advantages that continue to keep a fire under house prices will lead to more gnashing of teeth rather than the lowering of prices.”
He said that if current trends continue young people in Sydney, and to a lesser extent in Melbourne, will be living “fabulous Facebook lives” but will be enduring real lives with “lousy” housing options.
The report also found that the average loan size to Australian first home buyers increased by 1.3 per cent over the December quarter to $323,633, down 1.5 per cent year on year.
Rental affordability also fell with the proportion of median family income required to meet median rents increased 0.2 per cent, to 24.4 per cent.
The number of loans to first home buyers in Victoria increased by 9.5 per cent, 2.1 per cent down on the December 2015 quarter. First home buyers now make up 15.2 per cent of the state’s owner-occupier market.
In NSW the proportion of income to loan factor is 6.5 per cent higher than the nation’s average. NSW 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 December quarter, 18.4 per cent were from NSW. The number of loans to first home buyers increased by 7.8 per cent.
Of all Australian first home buyers over the quarter, 24.9 per cent were from Queensland while the proportion of first home buyers in the state’s owner-occupier market was 17.4 per cent. The average loan size to first home buyers decreased by 0.8 per cent for the quarter, but recorded a slight increase of 0.1 per cent compared to the December quarter 2015.
In the national breakdown, 5.4 per cent of first home buyers were from South Australia while the proportion of first home buyers of the state’s owner-occupier market recorded an increase to 10.9 per cent.
Western Australia recorded a 1.3 per cent increase in the number of first home buyers over the quarter, however, down 11.3 per cent against the December quarter of 2015. WA’s proportion of first home buyers in percentage terms of the owner-occupier market across Australia was 21 per cent.
The number of first home buyers in Tasmania increased by 6.5 per cent for the December quarter or 14.2 per cent compared to the same quarter of 2015. The average home loan to first home buyers went down by 6.6 per cent to $227,500.
The ACT recorded a 12 per cent increase in the number of loans to first home buyers, down 3.7 per cent against the December quarter 2015. First home buyers made up 14.5 per cent of the territory’s owner-occupier market with the average loan for first home buyers decreasing by 1.4 per cent over the quarter to $319,133.
The number of loans to first home buyers in the Northern Territory increased by 4.8 per cent, up 29.9 per cent on the December quarter of 2015. The proportion of first home buyers of the territory’s owner-occupier market was 16.4 per cent. The average loan size to first home buyers increased by 12.2 per cent to $327,367 for the quarter.
[Related: More Sydney suburbs pushing $1m median mark]
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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