First homebuyer affordability remains flat

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The HIA-Commonwealth Bank First Home Buyer Affordability Index inched up 0.4% during the June quarter, but was still 6% below what it was a year earlier.

The index, at 105.3 for the June quarter, reflects the ratio of average household disposable income to the qualifying income required to meet the payments on a typical dwelling, based on Commonwealth Bank data. In most of the country's urban areas, such as Sydney, Melbourne, Adelaide, Hobart, regional Queensland and regional South Australia, affordability dropped in the June quarter.

Last year in the June quarter, the bank's interest rate was at 7.45%, compared to 8.9% this year, according to the index. Mortgage repayments accounted for 28.5% of total first homebuyer income, the second highest proportion on record.

"High interest rates and an extremely onerous set of local, state and federal government taxes and charges on new housing continue to slug new homebuyers," said HIA chief economist Harley Dale.

The monthly loan repayment needed on a typical first-home mortgage increased 1% from $2,799 to $2,827 over the previous quarter. The HIA said the situation could worsen due to the impending impact of the national skills shortage. Dale said affordability would continue to decline unless improvements on taxation were made.

"Affordability will only improve if all governments work together to remove the onerous tax burden and regulatory imposts on new residential construction," he said.

The report said the median price for first homebuyers dropped $1,000 from the March to June quarter, from $425,600 to $424,600, or 0.2%. The average disposable income rose 0.6% from $84,900 to $85,400 over the same period. That income remained slightly above the June quarter loan-qualifying annual disposable income of $81,100.

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