Housing affordability deteriorates over September quarter

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Housing affordability declined across more than half of the country over the September quarter, with a nearly a third of the median family income now required to meet an average home loan repayment.

According to the latest Adelaide Bank/REIA Housing Affordability Report, affordability worsened in five states and territories over the three months to the end of September.

Nationally, 31.7% of a median family income is now needed to pay off an average mortgage.

That proportion is a 1.4% increase compared to what was needed to meet loan repayments in the June quarter and is 1.3% higher than compared to the corresponding period in 2014.

According to report, affordability deteriorated in New South Wales, Victoria, South Australia, Queensland and the Northern Territory over the quarter, while conditions improved in the ACT and Western Australia.

Conditions remained unchanged in Tasmania over the three months.

“Sadly, the deterioration was seen in most states and territories and the overall level of housing affordability now is at its worst level since March 2013,” REIA president Neville Sanders said.

“Already the least affordable, New South Wales recorded the biggest fall in housing affordability across the country. New South Wales is still the only state or territory with an average loan size above $400,000, however Victoria follows closely at $390,503,” Sanders said.

In NSW mortgage repayments are accounting for 38% of the median family income, while in Victoria they are accounting for 34%.

Affordability is at its best in the ACT, where 19% of the median family income is directed towards a mortgage, while in Western Australia and Tasmania it sits at 23%.

“Nationally, the average loan size increased 3.8% to $347,367 for the quarter and by 9.0 % compared to the same time last year,” Adelaide Bank general manager Damian Percy said.

"New South Wales, Victoria, Queensland, South Australia and the Northern Territory also recorded increases in the number of loans to first home buyers for the September quarter, with NSW recording the biggest rise - a figure of 9.6 %. Nationally however, first home buyers show a 2.2 % decrease year on year.”

The report did have some good news for tenants though, with national rental affordability improving over the quarter, with just 24.6% of the median family income now required to pay median rents.

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