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Australian families spend 36 per cent of their income on their mortgage

Housing affordability continued its decline in the September quarter with hard-hit first-home buyers pulling out of the market, the latest Real Estate Institute of Australia (REIA) analysis shows.

The REIA’s Housing Affordability Report found 36.2 per cent of owner-occupiers’ income went to paying their mortgage, which is a 3.9 percentage point rise over the past year.

The national median weekly family income increased 1.2 per cent in the three months to September to $2023, but the average monthly loan repayment jumped 4 per cent in the quarter to $3177.

The total number of loans to all borrowers fell 7.2 per cent in the September quarter to 107,875, with the average loan increasing to $570,412.

This is an increase of 4 per cent on the previous quarter and a 17.4 per cent annual increase.

But REIA President Adrian Kelly said it was first-home buyers that were hurting the most.

“The number of first-home buyers decreased to 37,782, a fall of 12.6 per cent during the quarter and just a 1 per cent increase over the past 12 months,” he said.

“First-home buyers now make up 35 per cent of owner-occupier dwelling commitments.

“The number of first-home buyers decreased over the September quarter in all states and territories. South Australia had the largest decrease of 21.6 per cent and the ACT had the smallest decrease of 0.7 per cent.”

Weekly family income and proportion needed to meet loan repayments by state. Source: REIA.

The report showed the average loan to a first-home buyer in the September quarter jumped to $459,256, which was 2 per cent higher than the June quarter.

“Nationally the average loan size increased for first-home buyers by 14 per cent over the year and these impacted differently throughout the nation, with Tasmania rising by 21.3 per cent, while the Northern Territory rose by 5.8 per cent,” Mr Kelly said.

Rental affordability dropped only slightly in the September quarter, with the proportion of income required to meet median rent rates rising to 22.9 per cent.

This was an increase of 0.2 percentage points for the quarter and a 0.4 percentage point rise over the past year.

“Over the quarter, rental affordability improved in Victoria and Tasmania, remained stable in the ACT, but declined in all other states and territories,” Mr Kelly said.

“The least affordable state or territory in which to rent a property was Tasmania, where the proportion of income required to meet median rent was 29.7 per cent. This was 6.8 percentage points higher than the national average.

“Victoria became the most affordable, where the proportion of income required to meet median rent was 19.7 per cent.”

Source: REIA.

New South Wales

NSW is the least affordable state or territory to meet loan repayments.

Housing affordability dropped in NSW in the September quarter, with the proportion of family income set aside for mortgage repayments climbing 1.2 per cent to 44.7 per cent.

The average loan in NSW increased 4.2 per cent in the quarter to $735,282.

The number of loans to first-home buyers fell to 9237, which was a 9.7 per cent drop over the quarter, but an increase of 2.3 per cent over the past year.

First-home buyers made up 31.8 per cent of the state’s owner-occupier market, with the average loan rising 1.9 per cent to $568,312, which is a 15.8 per cent annual increase.

Rental affordability also fell in NSW over the quarter with the proportion of family income needed to meet median rent payments rising 0.6 percentage points to 26 per cent.

Victoria

The proportion of family income needed to meet loan repayments rose 1.6 per cent in the September quarter to 37.2 per cent.

The number of loans dropped 12.5 per cent in the quarter to 29,359, but that figure is still 27 per cent higher than a year ago.

The average loan size rose 5.7 per cent in the quarter to $600,766.

First-home buyers made up 37.8 per cent of the state’s owner-occupiers, with the average loan rising 2.5 per cent in the quarter to $481,135, which was a 16.8 per cent annual jump.

Rental affordability improved in Victoria in the quarter and in the year with the proportion of family income needed to meet median rent falling to 19.8 per cent, which is 0.2 per cent down on the June quarter and 0.4 per cent lower than a year ago.

Queensland

Housing affordability dropped in Queensland with the portion of family income needed to meet average loan repayments climbing 0.6 per cent in the September quarter to 32.3 per cent.

The number of loans fell 1.4 per cent in the quarter and 17.4 per cent annually, to 23,801.

The average loan size in Queensland increased 2.1 per cent in the quarter to $401,415, which is a 9.9 per cent annual rise.

Loans to first-home buyers dropped 4.8 per cent in the quarter and 1.3 per cent annually to 7,917.

First-home buyers make up 33.3 per cent of the state’s owner-occupiers and have an average loan of $401,415.

In Queensland the proportion of family income devoted to paying rent increased to 21.6 per cent, which was a slight increase of 0.2 percentage points on the previous quarter and 0.4 percentage points higher than a year ago.

South Australia

In South Australia a family devoted 30.8 per cent of its income to mortgage payments in the September quarter, a 1.8 per cent increase on a year earlier.

The average loan increased 2.4 per cent in the September quarter to $410,628, which is a 10.8 per cent annual rise.

The number of first-home buyers in South Australia fell 21.6 per cent in the quarter to 2,179, with the average loan rising 2.9 per cent to $361,680.

Rental affordability also declined in the state, with families needing 23.9 per cent of their income to pay rent, which was a 0.3 percentage point increase on the June quarter.

Western Australia

Housing affordability improved in the west in the September quarter, with a small 0.1 percentage point drop in the proportion of family income needed to meet mortgage repayments to 26.3 per cent.

The average loan size did rise 1.1 per cent in the quarter though to $435,456, with the total number of loans dropping to 13.126.

The number of first-home buyers in WA fell 10.6 per cent over the quarter to 5561, but that figure is 8.1 per cent higher than a year ago.

Rental affordability dropped in the state, with the proportion of family income needed to meet rent payments rising to 19.8 per cent, which is a 2.1 per cent increase over the past year.

Tasmania

Housing affordability fell in Tasmania as well, with the proportion of family income needed to meet mortgage payments climbing 1.3 per cent for the quarter and 3.4 per cent over the year to 32 per cent.

The total number of loans fell 16.5 per cent in the September quarter and 13.8 per cent for the year to 1775.

The average loan size rose 5.8 per cent to $406,648, which is an 18 per cent jump over the past year.

Loans to first-home buyers decreased 14.8 per cent over the quarter to 631, with the average loan rising 3.9 per cent to $346,434. 

Rental affordability improved in Tasmania, with the proportion of family income needed to meet median rent falling 0.1 percentage points to 29.7 per cent. 

Northern Territory 

In the Northern Territory housing affordability remained stable over the September quarter with the amount of family income needed to meet loan repayments staying at 23.2 per cent.

But that figure is 0.4 per cent higher than it was a year ago.

The total number of loans dropped 4.7 per cent in the quarter to 824, with the average loan size rising 0.7 per cent to $396,359. This is a 5.1 per cent increase over the past year.

Loans to first-home buyers dropped 19.7 per cent in the quarter to just 281, with the average loan size climbing 4.9 per cent to $384,342.

Rental affordability in the NT declined in the three months to September, with the proportion of family income required to meet median rent rising 1.4 per cent to 26.8 per cent.

The Northern Territory is the only state or territory where it is more affordable to buy versus rent a home.

Australian Capital Territory

Housing affordability in the ACT improved slightly in the September quarter with the proportion of family income needed to make mortgage repayments falling 0.1 percentage points to 25.8 per cent.

But that figure is still 1.9 per cent higher than a year ago.

The total number of loans dropped 5.5 per cent in the quarter, but rose 9 per cent over the year, to 2528, with the average loan size rising to $556,962, which is a 0.9 per cent climb for the quarter and 13.3 per cent for the past year.

Loans to first-home buyers fell 0.7 per cent to 871, but remained 6.7 per cent up for the year. The average loan to first-home buyers was $496,096, which was a 3.7 per cent increase for the quarter and 13.6 per cent rise over the past year.

Rental affordability also remained stable with the proportion of family income devoted to median rent staying at 21.2 per cent.

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.