Housing affordability worsens

  • By Zilla Efrat

Housing attordability worsened in the September quarter of 2021, with first home buyers hardest hit by the rising market, according to the latest Real Estate Institute of Australia (REIA) Housing Affordability Report.

The report that the proportion of income required to meet loan repayments rose to 36 er cent nationally - a jump from 27.2 per cent when housing affordability peaked around 20 years.

"While housing affordability declined across many states over the September quarter, it has improved in Western Australia and the Australian Capital Territory," says REIA president Adrian Kelly.

"The Northern Territory remained stable and is still the most affordable state or territory to meet home loan repayments."

Kelly says the number of first home buyers decreased to 37,782, a fall of 12.6 per cent during the quarter. This group now makes up 35 per cent of owner-occupier dwelling commitments.

"The number of first home buyers decreased over the September quarter in all states and territories. South Australia had the largest decrease of 21.6 per cent and the Australian Capital Territory had the smallest decrease of 0.7 per cent." Says Kelly

"Over the past 12 months, the number of first home buyers increased in New South Wales, Victoria, Western Australia and Australian Capital Territory, Queensland, South Australia, Tasmania and the Northern Territory.

Kelly adds: "As we attempt to start adjusting to the new COVID-19 normal, buyer and investor interest shows little sign of being satiated.

"This competition means the average loan size to first home buyers has increased to $459,256. This was an increase of 2 per cent over the quarter and an increase of 14 per cent over the past 12 months.

The increases in average loan size over the year differed across Australia, with Tasmania rising by 21.3 per cent and the Northern Territory edging up by 5.8 per cent

Over the September quarter, the overall average loan size increased to $570,412 - a rise of 4 per cent over the quarter and a jump of 17.4 per cent over the past 12 months.

The report found that the average loan size increased in all states and territories over the quarter, with Tasmania having the highest rise of 5.8 per cent. The average loan size increased in all states and territories over the past 12 months, with New South Wales recording the highest annual increase 21.4 per cent.