Housing affordability improves: REIA

Housing affordability improved around the country in the March quarter, new research shows.

The March quarter 2019 edition of the Adelaide Bank/REIA Housing Affordability Report reveals that New South Wales had the largest improvement in housing affordability, with a 1.3 per cent decrease in home loan repayments.

The report also revealed that the total number of loans declined (excluding refinancing) decreased to 86,909, a fall of 20.0 per cent over the March quarter.

REIA President Adrian Kelly said that this is not unusual for the first quarter of the calendar year, however, compared with the same quarter of 2018, the number of new loans declined by 13.7per cent

“The number of those entering the home loan market also declined over the year”, Kelly said.
“Interestingly, while loan size decreased for changeover buyers, it increased marginally for first home buyers.”

Kelly predicts the RBA’s recent decision to cut interest rates by 25 basis point rates will see a further improvement in affordability.

“Subject to the banks passing on the full cut, for a first home buyer this means a saving of $70 per month based on an average loan size of $338k in the March quarter of 2019”, he said.

While rental affordability improved marginally in the larger states of New South Wales, Victoria and Queensland as well as in Western Australia and the Northern Territory, a large decline in rental affordability in South Australia and Tasmania offset this improvement resulting in an overall decline in rental affordability nationally.

State by State

New South Wales
Over the March quarter, housing affordability in New South Wales improved with the proportion of income required to meet loan repayments decreasing to 35.4 per cent, a fall of 1.3 percentage points over the quarter. Affordability also improved over the past year, by 1.1 percentage points.

Victoria
Affordability lifted in Victoria with the proportion of income required to meet loan repayments decreasing to 32.5 per cent, a drop of 0.6 percentage points over the quarter and 1.6 percentage points compared to the previous year.

Queensland
Housing affordability in Queensland improved with the proportion of income required to meet loan repayments decreasing to 27.5%, down 0.6% over the quarter but remaining steady compared to the same quarter last year.

South Australia
Over the March quarter, housing affordability in South Australia improved with the proportion of income required to meet monthly loan repayments decreasing to 26.9 per cent, a fall of 0.6 percentage points over the quarter and 0.3 percentage points compared to the March quarter in 2018.

Western Australia
Affordability in Western Australia improved with the proportion of income required to meet loan repayments decreasing to 22.6 per cent, a fall of 0.5 percentage points over the quarter and 1.0 percentage points over the previous year.

Tasmania
During the March quarter, affordability in Tasmania improved with the proportion of income required to meet loan repayments falling 0.9 percentage points to 25.4 per cent.

Northern Territory
Over the March quarter, the situation in the Northern Territory declined with the proportion of income required to meet loan repayments increasing to 20.2 per cent, an increase of 0.8 percentage points over the quarter and an increase of 0.4 percentage points over the year.

Australian Capital Territory
Housing affordability improved with the proportion of income required to meet loan repayments decreasing to 20.3 per cent, a decrease of 0.3 percentage points over the quarter.