Housing Affordability Declines - Better News for Renters
Endangered first home buyers discovered in the Territories
The June quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows a decline in housing affordability nationally with the proportion of median family income required to meet average loan repayments increasing by 1.0 percentage points to 31.4 per cent. This was an increase of 0.2 percentage points compared to the corresponding quarter in 2016. The number of first home buyers increased by 14 per cent during the quarter or 1.0 per cent year on year and there was some relief for renters also apparent over the quarter.
Darren Kasehagen, Head of Business Development at Adelaide Bank said: "A slight increase in housing affordability shouldn’t overshadow the welcome news that the number of first home buyers increased by 14.0% during the quarter. Compared to the corresponding quarter in 2016, the number of first home buyers went up in Victoria, Queensland, Western Australia, Australian Capital Territory and the Northern Territory, with both territories recording very solid FHB growth of 49.6% and 40.0% respectively.
"The average loan size to first home buyers increased by 1.2% over the June quarter and 0.6% over twelve months to $365,600 with the average loan size to first home buyers decreasing in South Australia, Tasmania and the Australian Capital Territory over the quarter. Year on year, the average loan size to first home buyers increased in New South Wales, Victoria, Queensland and the Northern Territory.
"Over the quarter, the proportion of median family income required to meet rental payments reduced by 0.6 percentage points to 24.3%. This improvement was recorded across all states and territories except in the Australian Capital Territory which was stable. In fact, it costs less on average to meet mortgage payments in Tasmania and the Northern Territory than it does to rent.
"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 Kasehagen concluded.
Fast Facts
The average loan size to Australian borrowers is now $386,664, an increase 3.7 per cent over the June quarter or an increase of 4.5% compared to last year. Victoria tops the charts as the State with the largest number of first home buyers, followed closely by Queensland.
Median rents increase slightly
Nationally, the June quarter saw an improvement in rental affordability. The proportion of family income required to meet median rents decreased by 0.6 percentage points to 24.3 per cent.
Across the nation
Victoria:
Of the total number of Australian first home buyers that purchased during the June quarter, 6,648 were from Victoria. The number of loans to first home buyers in Victoria increased by 10.0%. In Victoria, first home buyers now make up 21.1% of the State’s owner-occupier market. Rental affordability improved for the quarter with a decrease of 0.7% of income required to meet median rents.
NSW:
The proportion of family income required to meet loan repayments is 6.6% higher than the nation’s average. 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 June quarter, 18.2% were from New South Wales. First home buyers now make up only 13.0% of the State’s owner-occupier market – the lowest level across the nation. Rental affordability improved for the quarter with a decrease of 0.4 % of income required to meet median rents.
Queensland:
The proportion of income required to meet home loan repayments increased to 27.2%, a 0.5 percentage point increase over the quarter. Of all Australian first home buyers over the quarter, 25.4% or 6003 were from Queensland while the proportion of first home buyers in the State’s owner-occupier market was 25.3%. Rental affordability improved slightly for the quarter with a decrease of 0.7% to 23.0% 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 26.8%, an increase of 0.6 percentage points over the quarter but a decrease of 0.1 percentage points compared to the June quarter 2016. In the national breakdown, 5.8% of first home buyers were from South Australia while the proportion of first home buyers in the State’s owner-occupier market recorded an increase of 12.6%. Rental affordability improved by 0.7 percentage points.
Western Australia:
The number of first home buyers in Western Australia increased by 16.0% over the quarter and by 3.8% compared to the same time last year. 17.5% of all Australian first home buyers were from Western Australia. Housing affordability declined with the proportion of income required to meet loan repayments increasing to 23.6% or 0.2 percentage points over the quarter but a decrease of 0.3 percentage points year on year.
Tasmania:
Housing affordability in Tasmania declined with the proportion of income required to meet home loan repayments increasing to 23.9%, an increase of 0.3 percentage points over the quarter and an increase of 0.2 percentage points year on year. Rental affordability in Tasmania improved with the proportion of income required to meet median rents decreasing to 25.8%, a 0.8 percentage point drop over the quarter but an increase of 0.8 percentage points year on year. First home buyers in Tasmania decreased by 3.3% over the quarter and by 17.6% compared to the same quarter last year.
Australian Capital Territory:
The number of loans to first home buyers in the Australian Capital Territory increased to 570, an increase of 49.6% over the quarter and an increase of 21.8% compared to the June quarter 2016. Housing affordability in the Australian Capital Territory improved with the proportion of income required to meet home loan repayments decreasing to 19.8%, a 0.3 percentage point drop over the quarter and a decrease of 0.7 percentage points compared to the same quarter last year. Rental affordability remained stable. The proportion of income required to meet the median rent remained at 17.9%.
Northern Territory:
Housing affordability in the Northern Territory improved with the proportion of income required to meet loan repayments decreasing to 20.3% in the June quarter or 0.8 percentage points. This was a decrease of 1.8 percentage points year on year. Rental affordability in the Northern Territory also improved with the proportion of income required to meet the median rent decreasing to 23.1% or 0.6 percentage points over the quarter or a decrease of 2.0 percentage points compared to the June quarter 2016.
