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Australia’s housing and rental affordability declines

Overall rental and housing affordability has fallen in Australia in the March quarter, according to new data from REIA.

The latest Real Estate Institute of Australia’s Housing Affordability Report has found housing affordability has improved in NSW and South Australia, remained steady in Western Australia and the Australian Capital Territory but it declined in Victoria, Queensland, Tasmania and the Northern Territory.

REIA President Adrian Kelly said overall housing affordability across Australia has declined with the proportion of income required to meet loan repayments increasing to 34.7 per cent, a rise of 0.1 percentage points over the quarter.

When compared to the corresponding quarter of 2020, housing affordability improved with the proportion of income required decreasing by 0.5 percentage points.

Mr Kelly said rental affordability declined with the proportion of income required to meet median rents increasing to 24.4 per cent, an increase of 0.4 per cent over the March quarter and an increase of 0.7 per cent over the past 12 months. 

“The decline is consistent with the March quarter CPI, which showed that the capital city weighted average rents remained unchanged for the March quarter following an increase of 0.1 per cent in the December 2020,” he said.

Mr Kelly said the number of first-home buyers decreased to 44,007, a fall of 4.4 per cent during the quarter but a rise of 62.6 per cent over the past 12 months with first-home buyers now making up 40.3 per cent of owner-occupier dwelling commitments.

“Over the March 2021 quarter, the number of first-home buyers increased in Victoria, South Australia and Western Australia but decreased in all other states and territories. Over the past 12 months, the number of first-home buyers increased in all states and territories, ranging from 37.3 per cent in Tasmania to 105 per cent in Western Australia,” he said.

Mr Kelly commented that in the March quarter, the Reserve Bank of Australia (RBA) maintained the official cash rate at 0.1 per cent, which has had minimal impact on housing affordability.

“Over the March quarter, the average loan size to first-home buyers increased to $425,875, an increase of 2.2 per cent over the quarter and an increase of 1.2 per cent over the past 12 months,” he said.

“Over the March quarter, the average loan size to first-home buyers increased in all states and territories except New South Wales. Increases range from 2.2 per cent in the Australian Capital Territory to 6.1 per cent in Victoria.

“The total number of owner-occupied dwelling loans decreased to 109,252, a drop of 0.6 per cent over the March quarter but an increase of 48.4 per cent over the past 12 months.

Over the quarter, the total number of loans for owner-occupied dwellings increased in Victoria, South Australia and Western Australia but decreased in all other states and territories. Over the past 12 months, the number of loans increased in all states and territories, ranging from 31.8 per cent in Tasmania to 94.6 per cent in Western Australia.

“Over the March quarter, the average loan size grew to $506,340, an increase of 1 per cent over the quarter and a rise of 2.6 per cent over the past 12 months,” Mr Kelly said.

“During the quarter, the average loan size increased in all states and territories except New South Wales and South Australia.

Over the past 12 months, the average loan size rose in all states and territories, ranging from 2.3 per cent in Victoria to 10.8 per cent in Tasmania.”

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