First home buyers in decline despite affordability improvement

by Phil McCarroll07 Sep 2016
The June 2016 quarter saw an increase in housing affordability according to new research released today, however first home buyers continue to be in decline.

According to the June quarter edition of the Adelaide Bank/Real Estate Institute of Australia (REIA) Housing Affordability Report, the proportion of median family income required to meet average loan repayments decreased by 0.6% to 29.4% over the three-month period.

In the 12 months to June, the proportion of median family income required to meet average loan repayments has decreased 0.9%.

On a state-by-state basis, NSW is the most unaffordable state, with 35.4% of the median family income required to meet average loan repayments, followed by Victoria at 31%.

The ACT is the most affordable jurisdiction, with just 19.4% of the median family income required to meet average loan repayments, followed by the Northern Territory at 20.9%.

Over the June quarter, the Adelaide Bank/REIA report shows the number of new home buyers over the June quarter was 25,289, a 10.5% increase when compared to the March quarter.

However, in year-on-year terms the number of first home buyers was 0.7% lower in the June 2016 quarter compared to the corresponding period 12 months ago.

Adelaide Bank general manager Damian Percy said while the improvement in affordability is a positive, the yearly decline in first home buyers is a serious cause for concern.

“Of particular note is the continuing long term decline in the number of first home buyers.  When you consider that modelling for adequacy of income in retirement typically assumes that people own their own home, this should be concerning to policymakers,” Percy said

“First home buyer numbers are on a glide-path to what is currently a two decade low. This trend will provide major challenges for future governments, ultimately impacting the number of people on public housing waiting lists and on supported housing. The time to fix government housing policy is now, not in ten, twenty or thirty years’ time,” he said.

According to the report, first home buyers now make up 14.3% of the owner-occupier market or 22.5% if refinancers are excluded.

Over the June quarter, the report shows the total number of loans (excluding refinancing) was 12.7%, a 12.7% increase compared to the previous three months.

Year-on-year the number of loans written in the June 2016 quarter was 8.6% higher than the three months to June 2015.

Over the June quarter, the average loan size increased marginally by 0.1%, to $369,390. This represents an increase of 2.7% compared to a year ago.

In terms of first home buyers, he average loan size to first home buyers decreased by 0.1% over the June quarter to $328,733.

At the end of June, first home buyer loans were 0.8% higher year-on-year.
 

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