INDUSTRY NEWSNationalNEWS

Buyers and renters continue to struggle with housing affordability

Housing affordability has continued to fall with more pain ahead according to the Real Estate Institute of Australia (REIA).

The proportion of income required to meet loan repayments increased 0.2 percentage points to 37.3 per cent over the March quarter, while the proportion of income required to meet median rent jumped 0.5 percentage points to 23.5 per cent according to the REIA.

REIA President Hayden Groves said while housing affordability on a national level fell, pressure had eased in some locations.

“Housing affordability improved in New South Wales and the Northern Territory, remained stable in the Australian Capital Territory but declined in all other states,” Mr Groves said.

“Rental affordability declined in all states and territories except the Northern Territory.

“Tasmania remains the most unaffordable state to rent with income to rent needed sitting at a huge 30.8 per cent.”

Mr Groves said the number of first home buyers decreased to 29,093, a drop of 22.5 per cent during the quarter and a fall of 33.9 per cent over the past 12 months on the back of poor affordability.

“First home buyers now make up 31.6 per cent of owner-occupier dwelling commitments, a decrease of 2.7 percentage points over the quarter and 8.7 percentage points over the year,” he said.

“The number of first home buyers fell over the March quarter in all states and territories.

“Declines ranged from 10.5 per cent in Western Australia to 40.2 per cent in the Northern Territory.”

Mr Groves said the Reserve Bank of Australia’s announcement of further interest rate hikes would likely prompt a further drop in housing affordability, but added that rates remain historically low and will hopefully help slow rising inflation.

According to Mr Groves, the average loan size for first home buyers increased 0.9 per cent over the quarter and 11.7 per cent in the past year to $475,544.

“The average loan size to first home buyers increased in all states and territories, ranging from 0.1 per cent in New South Wales to a whopping 9.8 per cent in Tasmania,” he said.

“The total number of owner-occupied dwelling loans decreased to 91,922, a decrease of 16.1 per cent over the March quarter and a fall of 15.9 per cent over the past 12 months.” 

The total number of loans for owner-occupied dwellings decreased in all states and territories over the March quarter. Decreases ranged from 8.2 per cent in Western Australia to 21.3 per cent in New South Wales.

With house prices rising so sharply, the average loan size rose to $603,395 in the March quarter, an increase of 2.1 per cent over the quarter and an increase of 19.2 per cent over the past 12 months, making it the largest annual increase since the current ABS series began in 2002.

“Over the quarter, the average loan size grew in all states and territories except the Northern Territory which had a marginal decline of 1.1 per cent,” Mr Groves said.

“Increases ranged from 1.0 per cent in the Australian Capital Territory to 6.1 per cent in South Australia. 

“Over the past 12 months, the average loan size increased in all states and territories with New South Wales recording the highest annual growth rate of 21.6 per cent.

“With the Federal Election 2022 now behind us, it is time to get to work on the fundamentals of housing supply and affordability for Australia’s renters, first time buyers and home owners.”

REIA will work with the new Federal Minister for Housing, Julie Collins, on a national housing plan for housing supply and affordability.

Show More

Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.