Home Market Insights REIA: Housing affordability declines, rental affordablity improves

REIA: Housing affordability declines, rental affordablity improves

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Housing loan affordability has declined across Australia but rental affordability has generally improved according to a new report.

The joint report by Adelaide Bank and the Real Estate Institute of Australia (REIA) found that the proportion of median family income required to meet average loan repayments increased to 31.4% (+0.2%) in the second quarter of 2017.

In contrast, the proportion of median family income required to meet rent payments declined to 24.3% (-0.6%) over the quarter.

According to REIA President Malcolm Gunning, the total number of loans to first home buyers increased by 9.6% and 14% respectively, with increases in all states and territories except Tasmania.

“First home buyers now make up 14.3 per cent of total owner-occupied housing. This rate has been dropping steadily over the past 5 years but seems to have stabilised over the past 18 months,” Mr Gunning said.

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“Historically, rental affordability declined markedly from the June quarter 2007 reaching its lowest point in the March quarter 2010. Since then rental affordability has been showing a trend improvement reflecting the pickup in investment in housing from the end of 2011,” he added.

In SA, housing affordability dropped with the proportion of income required to meet monthly loan repayments increasing to 26.8% (+0.6%). Meanwhile, rental affordability improved, with the proportion of income required to meet rent payments decreasing to 21.9% (-0.7%).

The number of loans to first home buyers in SA increased to 1,358 (+12.6%) over the quarter but decreased when compared with the June 2016 quarter (-5.0%).

Buyers in SA made up 5.8% of total first home buyers in Australia and the state’s owner-occupier market was 18%. Queensland saw the biggest increase in first home buyers, with the amount increasing by 11.8%; a 19.7% increase on the June 2016 quarter.