National housing affordability has improved to its best levels since 2013, according to the latest Housing Affordability Report released by Adelaide Bank and the Real Estate Institute of Australia.
The proportion of income required to meet loan repayments decreased by 2.4 percentage points to 30% over the quarter ending March 2016.
All states and territories saw improvements in housing affordability, with the exception of the Northern Territory where the proportion of income required to meet loan repayments increased by 0.7 percentage points.
New South Wales showed the greatest improvement in housing affordability with the proportion of income required to meet loan repayments going down by 4.0 percentage points, to 35.4%. However, New South Wales remained the least affordable state for homebuyers with the proportion of income required to meet loan repayments 5.4 percentage points above the national average.
The Australian Capital Territory is still the most affordable state or territory in which to buy a home with the figure sitting at 19.3%.
Whilst the improvement in housing affordability is welcomed, general manager of Adelaide Bank, Damien Percy, said it is still on the borderline of “housing stress” and is still concerning for first home buyers.
“…moderation in house price inflation and a resultant reduction in average borrowings nationally over the March Quarter has meant the proportion of weekly income needed to service a mortgage has fallen to 30%, which is the borderline of what has traditionally been the measure of ‘housing stress’.
“While this is good news, of more concern is the continuing long term decline in the number of first home buyers.”
First home buyers now make up just 14.6% of the owner-occupier market, according to the report, the lowest since the June quarter of 2004.