While policy makers have been called on to help improve housing affordability recently, new research has shown covering mortgage repayments in Australia is currently easier than it has been in years.

The latest Housing Affordability Report from Adelaide Bank and the Real Estate Institute of Australia (REIA) has shown that over the March 2016 quarter the proportion of income needed to meet loan repayments hit 30%, the lowest it has been at since 2013.

“The latest comprehensive data shows an improvement in housing affordability nationally with the proportion of income required to meet loan repayments going down to 30% from 32.4% in the last quarter of 2015 and 30.8% a year ago,” REIA president Neville Sanders said.  

“Encouragingly, seven out of eight states and territories recorded improvements, largely underpinned by lower loan sizes and moderate increases in income. A lower rate of growth in property prices, smaller loans and marginally lower interest rates resulted in lower average monthly loan repayments,” Sanders said.

The Northern Territory was the only market that saw affordability deteriorate over the quarter as the proportion of income required to meet loan repayments increased by 0.7% to 21.9%.

The biggest improvement in affordability in the quarter occurred in NSW where proportion of income required to meet loan repayments fell 4% to 35.4%, however it is still the most unaffordable of all states and territories, followed by Victoria at 32.7%.

In Queensland, 26.9% of income is currently needed to cover a mortgage repayment, while in South Australia it sits at 25.9% and 23.2% in Western Australia.

In Tasmania, 23% of income is needed for mortgage repayments, while the ACT is the most affordable market at 19.3%.

While affordability has improved, Adelaide Bank general manager Damien Percy said it still sits near the benchmark for what is considered mortgage stress and may explain why there has been a decline in first home buyers.

“The proportion of weekly income needed to service a mortgage has fallen to 30%, which is the borderline of what has traditionally been the measure of ‘housing stress’,” Percy said.

“While this is good news, of more concern is the continuing long term decline in the number of first home buyers,” he said.

First home buyers now make up just 14.6% of the owner-occupier market, according to the report, the lowest since the June quarter of 2004.

Over the March quarter rental affordability deteriorated, with the proportion of income needed to cover rental payments increasing 0.5% to 25.1%.