Are affordability concerns holding back your property investment ambitions? You may well be pleasantly surprised to learn that the nation’s housing affordability situation is showing signs of improving. But is it really turning a corner?
Housing affordability has improved slightly over the last three quarters, said Real Estate Institute of Australia (REIA) president Pamela Bennet, who added that this is good news “in the current circumstances”.
According to the latest REIA/Deposit Power Housing Affordability Report for the March 2012 quarter, the nationwide proportion of family income required to meet loan repayments decreased by 0.9% compared to the previous quarter – and now sits at 32%.
Additionally, all states and territories have shown housing affordability improvements compared to the first quarter of last year, says the report.
According to the report’s Home Loan Affordability Indicator (HLAI), which measures the ratio of median family income to average loan repayments, its March 2012 figure of 31.3% remains well below the long-term average of 38.6%. This, says the report, is thanks to improving mortgage affordability. However, the HLAI remains at its highest point since December 2009.
Rental affordability has also stabilised, says the report, but the proportion of income required to meet weekly rent payments is still well above the longer-term average.
“Housing affordability is still not at ideal levels but at least we are now heading in the right direction,” said Bennett. “If other factors continue to trend in the same direction, the interest rate cuts in May, and those announced yesterday should bring further good news for housing affordability next quarter,” said Bennett last week.
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