Housing affordability improves in March quarter
Housing affordability improved in the March 2016 quarter according to the latest REIA/Adelaide Bank Housing Affordability Report.
The Report shows that in the March quarter, the proportion of income required to meet loan repayments decreased by 2.4% to 30.0%.
“The first three months of the year brought good news on housing affordability,” says REIA president, Neville Sanders. “The level of affordability improved to its best level in the last two and a half years.”
New South Wales posted the largest improvement in housing affordability over the quarter, where the proportion of income required to meet loan repayments dropped by 4% to 35.4%. However, at 5.4% above the national average, New South Wales still remains the least affordable state or territory.
Elsewhere, with the exception of Northern Territory, all other states and territories posted an improvement in housing affordability over the March 2016 quarter compared to the December 2016 quarter. Canberra remains the most affordable jurisdiction.
- Victoria: the proportion of income required to meet loan repayments dropped by 1.9% to 32.7%.
- Queensland: the proportion of income required to meet loan repayments dropped by 1.5% to 26.1%.
- South Australia: the proportion of income required to meet loan repayments dropped by 1.2% to 25.9%.
- Western Australia: the proportion of income required to meet loan repayments dropped by 0.8% to 23.2%.
- Tasmania: the proportion of income required to meet loan repayments dropped by 0.7% to 23%.
- Northern Territory: the proportion of income required to meet loan repayments increased by 0.7% to 21.9%.
- ACT: the proportion of income required to meet loan repayments dropped by 0.6% to 19.3%.
“Improvements were seen throughout the country, except for the Northern Territory, and were largely underpinned by lower loan sizes and moderate increases in income,” says Sanders.
“A lower growth in house prices, smaller loans and marginally lower interest rates resulted in lower average monthly loan repayments.”
In other results, the report shows the number of first homebuyers dropped by a significant 16% to 22,640 – to make up 14.6% of the owner-occupier market.
“The figure is significantly smaller relative to the long-run average of 19.7% and is the lowest since the June quarter of 2004,” the report notes.
All states and territories recorded a drop in first homebuyers, with the largest decrease seen in New South Wales – down 22.6%.
And over the March 2016 quarter, the average loan size fell by 6.6% to $368,863 – which represents an increase of 2.8% compared to the March quarter of 2015.
Published on: Wednesday, June 01, 2016, Broker News
