Despite rising property prices in major cities, housing in Australia is becoming more affordable, according to a new report by Adelaide Bank and the Real Estate Institute of Australia (REIA).
The Housing Affordability Report shows the proportion of income required to meet loan repayments decreased 1.2 percentage points in the September quarter to 29.8 per cent.
“All states and territories recorded improvements in affordability over the quarter,” REIA president Peter Bushby said.
The most affordable homes are in the Australian Capital Territory, where families spend only 19.8 per cent of the family income to meet mortgage repayments.
On the other end of the spectrum, New South Wales came in as the most expensive state, with families spending 33.8 per cent of their income on their home loan.
Nonetheless, this result is an improvement over the September 2012 results, when households in New South Wales put 37 per cent of their income towards their mortgage.
These gains come despite rapid capital growth in New South Wales. Over the past 12 months, houses in metro areas experienced median growth of 9.1 per cent and country areas a growth rate of 7.2 per cent.
Next in line were Victoria, Queensland, South Australia and Western Australia, with repayments eating up between 25 and 30 per cent of average household income in these states.
Rental affordability has remained consistent over the past 12 months, with families putting around 25.6 per cent of their income towards their rent payments.
The rankings of the states for rental affordability mirrored those for mortgages, with 28.3 per cent of income going towards rent in New South Wales and 18.4 per cent in the ACT.