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Location breakdown: Housing affordability

Location breakdown: Housing affordability

by Emma Ryan | June 03, 2020 | 1 minute read

New research from the Real Estate Institute of Australia (REIA) has provided insight into housing affordability in each state and territory.

Housing affordability
June 03, 2020

According to the REIA’s Housing Affordability Report, the March quarter saw the proportion of income required to meet loan repayments decrease by 1.0 percentage points to 34.7 per cent.

“With the exception of Victoria, Tasmania and Western Australia, housing affordability improved across the states and territories with the Australian Capital Territory having the largest improvement 1.1 percentage points,” said REIA president Adrian Kelly.

“Rental affordability improved in the March quarter with the proportion of income required to meet rent payments decreasing to 23.5 per cent, a decrease of 0.1 percentage points over the quarter.

“Rental affordability improved in Queensland, Western Australia and the Northern Territory, but declined in New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory.”

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Further, the research showed the total number of loans has declined compared to the December quarter, something, Mr Kelly noted, is not surprising.

“This is not unusual for the first quarter of the calendar year, however there was a 4.2 per cent increase [in] the number of new loans from the same quarter of 2019,” he said.

“The number of first home buyers decreased to 27,082, a decrease of 10.7 per cent during the quarter but an increase of 23.1 per cent compared to the March quarter 2019.

“With the introduction of the First Home Buyer Deposit scheme on 1 January we expect that share of first home buyers will continue to grow,” he said.

NSW

Over the March quarter, housing affordability in NSW improved with the proportion of income required to meet loan repayments decreasing to 42.5 per cent. This represents a decrease of 0.4 percentage points over the quarter but an increase of 4.5 percentage points compared with the corresponding quarter 2019, the REIA research said. 

“With the proportion of income required to meet loan repayments 7.8 percentage points higher than the nation’s average, New South Wales remained the least affordable state or territory in which to buy a home,” the REIA said.

“Over the March quarter, rental affordability in New South Wales declined marginally with the proportion of income required to meet median rents increasing to 27.5 per cent, an increase of 0.1 percentage points over the quarter but a decrease of 0.7 percentage points compared with the corresponding quarter 2019.”

Looking at the total number of first home buyers in the March quarter, 24.5 per cent were from NSW.

The average loan to first home buyers increased to $502,552, an increase of 2.4 per cent over the quarter and an increase of 19.8 per cent compared to the same quarter last year, REIA noted. 

Overall, NSW has the largest average loan size across the country. It is 22.4 per cent higher than the national average.

Victoria

Housing affordability declined in Victoria throughout the March quarter, “with [a] proportion of family income devoted to meeting average loan repayments increasing to 37.5 per cent, an increase of 1.0 per cent over the quarter and an increase of 2.9 per cent when compared to the corresponding quarter in the previous year”, according to the REIA. 

“Rental affordability in Victoria declined over the quarter with the proportion of income required to meet median rent increasing to 23.0 per cent, an increase of 0.4 percentage points over the quarter but a decrease of 0.1 percentage points over the previous year,” the REIA said.

“The number of loans to first home buyers in Victoria decreased to 8,624, a decrease of 16.0 per cent over the quarter but an increase of 24.4 per cent compared to the March quarter 2019.”

The research highlighted that the average loan size was $514,741 over the quarter in Victoria, an increase of 4.1 per cent and an increase of 18.8 per cent when compared to the corresponding quarter 2019.

“Victoria’s average loan size is 5.9 per cent higher than the national average,” the REIA added.

Qld

The March quarter saw housing affordability improve in Queensland, with the proportion of income required to meet home loan repayments decreasing to 30.4 per cent. This represents a decrease of 0.2 percentage points over the quarter but an increase of 0.8 percentage points when compared to the March quarter 2019.

“Rental affordability in Queensland improved over the quarter with the proportion of the median family income required to meet the median rent decreasing to 22.0 per cent, a decrease of 0.1 percentage points over the quarter but remained stable compared with the same quarter 2019,” the REIA said.

“Over the March quarter, the number of loans to first home buyers in Queensland decreased to 5,419, a decrease of 5.9 per cent over the quarter but an increase of 20.8 per cent compared to the same quarter of 2019.

“Of all Australian first home buyers over the quarter, 20.0 per cent were from Queensland while the proportion of first home buyers in the state’s owner-occupier market was 34.1 per cent.”

Meanwhile, the average loan size in Queensland over the March quarter increased to $414,154, an increase of 0.4 per cent during the quarter and an increase of 12.0 per cent compared to the March quarter 2019.

"Queensland’s average loan size is 14.8 per cent lower than the national average,” the REIA said.

SA

Over the March quarter, housing affordability in South Australia improved with the proportion of income required to meet monthly loan repayments decreasing to 27.9 per cent, a decrease of 0.1 percentage points over the quarter but an increase of 0.2 percentage points compared to the March quarter 2019, according to the REIA.

“Rental affordability in South Australia declined over the quarter with the proportion of income required to meet rent payments increasing to 22.5 per cent, an increase of 0.2 percentage points over the quarter but a decrease of 0.3 percentage points compared to the March quarter 2019,” the REIA said.

“Over the March quarter, the number of loans to first home buyers in South Australia decreased to 1,493, a decrease of 10.5 per cent over the quarter but an increase of 8.7 per cent compared to the March quarter 2019.

“Of all Australian first home buyers over the quarter, 5.5 per cent were from South Australia while the proportion of first home buyers in the state’s owner-occupier market was 25.9 per cent.”

Further, the research noted the average loan size increased to $358,171. This represents an increase of 0.8 per cent over the quarter and an increase of 10.3 per cent compared to the same time last year.

“South Australia’s average loan size is 26.3 per cent lower than the national average,” the REIA said.

WA

Over the March quarter, housing affordability in Western Australia declined with the proportion of income required to meet loan repayments increasing to 25.0 per cent, an increase of 0.1 percentage points over the quarter and an increase of 0.2 percentage points compared to the March quarter 2019, REIA said.

“Rental affordability in Western Australia improved during the March quarter with the proportion of family income required to meet the median rent decreasing to 16.6 per cent, a marginal decrease of 0.1 percentage points over the quarter and a marginal increase of 0.1 percentage points compared to the year before,” the REIA said.

“The number of first home buyers in Western Australia decreased to 3,547 in the March quarter, a decrease of 2.3 per cent over the quarter but an increase of 12.0 per cent compared to the same time last year.

“The total number of loans in Western Australia decreased to 7,733, a decrease of 6.7 per cent over the quarter but an increase of 4.3 per cent compared to the March quarter 2019.”

Meanwhile, the average loan size increased to $406,246, an increase of 2.0 per cent over the quarter and an increase of 10.3 per cent compared to the March quarter 2019.

“Western Australia’s average loan size is 16.4 per cent lower than the national average,” the REIA said.

Tasmania

Housing affordability in Tasmania declined over the March quarter with the proportion of income required to meet home loan repayments increasing to 29.6 per cent, an increase of 0.4 percentage points over the quarter and an increase of 2.8 percentage points from the March quarter 2019, according to the REIA.

“Rental affordability in Tasmania also declined over the quarter with the proportion of income required to meet median rents increasing to 30.5 per cent, an increase of 0.5 percentage points over the quarter and an increase of 1.2 percentage points compared with the March quarter 2019,” the REIA said.

“The number of first home buyers in Tasmania decreased to 564, a decrease of 0.5 per cent over the quarter but an increase of 11.9 per cent compared to the same quarter of the previous year.

“Of all Australian first home buyers over the quarter, 2.1 per cent were from Tasmania while the proportion of first home buyers in the state’s owner-occupier market was 32.6 per cent.”

The REIA noted the average loan size Tasmania increased to $343,649, an increase of 2.8 per cent over the quarter and an increase of 21.0 per cent compared to the same time last year.

“Tasmania continues to have the lowest average loan size across the country. Tasmania’s average loan size is 29.3 per cent lower than the national average,” the REIA said.

NT

Housing affordability in the Northern Territory improved with the proportion of income required to meet loan repayments decreasing to 20.2 per cent in the March quarter, a decrease of 0.8 percentage points over the quarter and a decrease of 1.5 percentage points when compared to the March quarter 2019, the REIA said.

“Rental affordability in the Northern Territory improved over the quarter with the proportion of income required to meet the median rent decreasing to 20.6 per cent, a decrease of 0.6 percentage points over the quarter and a decrease of 0.3 percentage points compared to the March quarter 2019,” the REIA said.

“The number of loans to first home buyers in the Northern Territory decreased to 200, a decrease of 8.7 per cent over the March quarter but an increase of 10.5 per cent compared to the March quarter 2019.

“Of all Australian first home buyers over the quarter, 0.7 per cent were from the Northern Territory while the proportion of first home buyers in the [territory’s] owner-occupier market was 44.9 per cent.”

Further, the average loan size decreased to $346,517. This marks a decrease of 2.6 per cent over the quarter but an increase of 1.8 per cent compared to the March quarter 2019.

“The Northern Territory’s average loan size is 28.7 per cent lower than the national average,” the REIA added.

ACT

Housing affordability in the ACT improved over the March quarter with the proportion of income required to meet home loan repayments decreasing to 21.2 per cent, a decrease of 1.1 percentage points over the quarter and a decrease of 0.5 percentage points compared to the corresponding quarter 2019, the REIA found.

“Rental affordability in the Australian Capital Territory declined over the March quarter with the proportion of income required to meet the median rent increasing to 19.0 per cent, an increase of 0.2 percentage points over the quarter but remained stable compared to the March quarter 2019,” the REIA said.

“The number of loans to first home buyers in the Australian Capital Territory decreased to 613, a decrease of 22.2 per cent over the quarter but an increase of 57.6 per cent compared to the March quarter 2019.

“Of all Australian first home buyers over the quarter, 2.3 per cent were from the Australian Capital Territory while the proportion of first home buyers in the [territory’s] owner-occupier market was 32.6 per cent.”

Finally, the average loan size in the ACT decreased to $458,471, a decrease of 3.8 per cent over the quarter but an increase of 6.8 per cent compared to the March quarter 2019.

“The Australian Capital Territory’s average loan size is 5.7 per cent lower than the national average,” the REIA research concluded.

About the author

Emma Ryan

Emma Ryan

Emma Ryan is the deputy head of content at Momentum Media.

Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.

Email Emma on: [email protected]com.au

Location breakdown: Housing affordability
Housing affordability
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