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Over 30% of family income going towards mortgage

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Reporter 4 minute read

The latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows an improvement in housing affordability nationally.

According to the March quarter edition of the report, the proportion of median family income required to meet average loan repayments has fallen marginally by 0.3 of a percentage point 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 per cent 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 per cent or a quarterly increase of 0.3 of a percentage point.

“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 per cent in NSW and the ACT,” Adelaide Bank’s head of distribution, Darren Kasehagen, said.

“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.”

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 per cent for the quarter but increased by 35.3 per cent year-on-year. First home buyers now make up 28.4 per cent of the state’s owner-occupier market. Rental affordability declined slightly, with a 0.2 of a percentage point increase for the quarter and with 23.8 per cent of income required to meet median rents.

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New South Wales: The proportion of family income required to meet loan repayments decreased by 1.3 per cent to 36.5 per cent. 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 per cent were from New South Wales. First home buyers now comprise 22.4 per cent of the state’s owner-occupier market. Rental affordability declined for the quarter with an increase of 0.4 of a percentage point, and 30.1 per cent of income is now required to meet median rents.

Queensland: The proportion of income required to meet home loan repayments decreased to 27.5 per cent, a 0.1 of a percentage point decrease over the quarter. Of all Australian first home buyers, 21.3 per cent or 5,639 were from Queensland, a decrease of 14.7 per cent. The proportion of first home buyers in the state’s owner-occupier market was 26.7 per cent. Rental affordability declined slightly with an increase of 0.4 of a percentage point to 23.1 per cent 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 per cent or 0.8 of a percentage point over the quarter. In the national breakdown, 4.9 per cent of first home buyers were from South Australia, while the proportion of first home buyers in the states owner-occupier market recorded a decrease of 13.7 per cent. Rental affordability declined by 0.5 of a percentage point to 22.4 per cent of income.

Western Australia: The number of first home buyers in Western Australia decreased by 10.5 per cent over the quarter, and 13.5 per cent 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 per cent. This was a 0.3 percentage point decrease. Rental affordability improved to 16.3 per cent of income, a year-on-year decrease of 1.3 per cent.

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

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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 per cent, a 0.1 of a percentage point increase over the quarter or a decrease of 0.4 of a percentage point 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 per cent, an increase of 0.3 of a percentage point for the quarter or an increase of 0.6 of a percentage point 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 per cent for the quarter or 1.1 per cent. This was a decrease of 1.3 per cent 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 per cent or 0.6 of a percentage point over the quarter. This was a decrease of 1.2 per cent year-on-year.

Over 30% of family income going towards mortgage
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James Mitchell

James Mitchell

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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