Housing loan affordability declines, rental affordability improves: report

HOUSING loan affordability has declined across Australia, however, it is good news for those who are renting with affordability generally improving in the second quarter of 2017, according to the Real Estate Institute of Australia (REIA).

The latest Adelaide Bank/REIA Housing Affordability Report found the proportion of median family income required to meet average loan repayments increased by 0.2 percentage points to 31.4 per cent.

REIA President Malcolm Gunning said at the same time, the total number of loans and the 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% of total owner occupied housing.

This rate has been dropping steadily over the past five years but seems to have stabilised over the past 18 months,” Mr Gunning said.

“Over the quarter, the proportion of median family income required to meet rent payments reduced by 0.6 percentage points to 24.3%.

Mr Gunning said this improvement was recorded across all states and territories except in Tasmania and the Australian Capital Territory.

“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,” Mr Gunning said. Housing affordability in Queensland declined over the June quarter with the proportion of income required to meet home loan repayments increasing to 27.2%, an increase of 0.5 percentage points over the quarter but a decrease of 0.5 percentage points compared to the same time last year.

Rental affordability in Queensland improved over the quarter with the proportion of the median family income required to meet the median rent decreasing to 23%, a decrease of 0.7 percentage points over the quarter and a decrease of 0.6 percentage points compared to the same quarter 2016.

Over the June quarter, the number of loans to first home buyers in Queensland increased to 6003, an increase of 11.8% over the quarter and an increase of 19.7% compared to the same quarter of 2016.

Of all Australian first home buyers over the quarter, 25.4% were from Queensland while the proportion of first home buyers of the State’s owner-occupier market was 25.3%.