Improved housing affordability ‘welcome’ result: Percy

by 04 Dec 2013
Housing affordability improved slightly over the September quarter, while first home buyer figures hit an all-time low.

According to the latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability report, the proportion of income required to meet loan repayments decreased 1.2 percentage points to 29.8% in the last quarter.

Compared to the same quarter of the previous year, the figure fell 3.5 percentage points. 

Damien Percy, general manager of Adelaide Bank says the figures are a “welcome result for aspiring home buyers”.

“Low interest rates and modest rises in family incomes have combined with relatively stable average loan sizes in many parts of Australia to maintain the trend of the last three years.

“Despite some of the headlines we see about frenzied auction bidding in the inner cities, for those prepared to look carefully and live in the middle and outer suburbs, there are still plenty of housing opportunities for people.  

“This is particularly the case in the capital city apartment markets and for houses in cities such as Brisbane, Adelaide, Canberra, Perth and Melbourne.”

Of “genuine concern”, however, is the record low levels of first home buyers in the last quarter, says Percy.

First home buyers made up just 13.6% of the owner-occupied market, compared to 14.6% in the previous quarter.

The figure is one of the lowest on record and far below the long-run average of 19.9%, despite eight interest rate cuts since November 2011.

“First home buyers remain a strong indicator of the underlying health of the Australian housing market. Their absence over recent months suggests that although affordability is improving, it needs to improve further.”

Following changes to the First Home Owner Grant in Victoria, the state recorded the largest drop in the number of first home buyers, down by 13.8% over the September quarter. Falls were also recorded in Western Australia, Tasmania and the Northern Territory.

The largest rise was in South Australia, with the number of loans to first home buyers up by 27.3%.

​The average loan size to first home buyers fell 0.4% over the quarter and 0.6% compared to the same time last year, to $288,033.