Housing affordability declined through June

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Housing affordability across the nation dropped, while rental affordability was seen to have improved, according to the latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report.

With the recorded shift in home affordability, the proportion of income required to meet average loan repayments increased 0.9 of a percentage point to 32.2%.

The number of first-home buyers (FHB) still hiked by 7.3% during the June quarter, a year-on-year increase of 20.6% compared to the same period in 2017. Darren Kasehagen, head of distribution, Adelaide Bank said that this growth was mainly driven by Victoria and New South Wales, which account for 31.7% and 25.5% of the FHBs, respectively.

Tracking lower in terms of the quantity of FHBs was Australian Capital Territory (ACT), which was the only market to experience a decline.

Meanwhile, the impact of declining housing affordability seemed to be apparent in the number of loans. Aside from the average loan size to FHBs jumping to $345,700, Kasehagen revealed more significant developments in lending data.

“The total number of new loans for the June quarter, excluding refinancing, increased by 8.3%, but compared to the same quarter last year we have seen an overall decrease of 3.8%. The average loan size for all borrowers now stands at $409,900, an increase of 3.3% over the quarter or 6% year on year,” he said.

Further, it was noted that rental affordability improved with the proportion of income required meeting average rental payments declining to 24.1% or a quarterly decrease of 0.7 percentage points.

“Rental affordability has improved everywhere - except the ACT and Northern Territory. The decreases in rental affordability were led by NSW with a drop in rental payments of 1.3% for the quarter, while Queensland has seen the greatest improvement in rents year on year.”

It was even found that Western Australia offers the most affordable rents among the states.

“Western Australia retained the crown as the State where rents require the lowest proportion of family income, with just 16.3% needed to meet the median rent, a figure that has remained relatively stable for the past year,” said Kasehagen.

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