A recent housing affordability report has shown an improvement nationally with the proportion of income required to meet loan repayments decreasing by eight basis points.
The Adelaide Bank/REIA Housing Affordability Report for the September quarter 2018 demonstrated Australians on average needed 31.4% of income to pay their loans.
Housing affordability improved in all states and territories except Queensland where there was no change. Compared to the September quarter 2017, housing affordability declined in all states and territories.
Darren Kasehagen, head of third party banking, Adelaide Bank said, “The improvement in housing affordability nationally is a welcome finding. Victoria continues to lead with the highest number of first home buyer loans and housing affordability improved most in NSW for the September Quarter.
“Refinancing excluded, the Australian Capital Territory had the biggest decrease in the number of loans at -7.8%.”
All states and territories showed an annual decline in new loans except for Tasmania where there was a 2.7% increase.
The declines ranged from 17.6% in Western Australia to 4.4% in South Australia with WA showing both the largest decrease in the number of loans to first home buyers, yet the highest proportion of first home buyers at 35.1%.
Kasehagen added, “When you consider that rents in Tasmania are now 28.3% of income and loan repayments are now at 25.1%, the decision to switch from renting to buying has never been easier.
“On these numbers, it’s about $50 a week cheaper to buy than rent, which may explain why Tasmania is bucking the trend as the only state to see an increase in the number of loans.”
According to the report, the number of first home buyers decreased to 27,839, a decrease of 2% during the quarter and a decrease of 3.7% compared to the September quarter 2017.
The number of first home buyers increased in Queensland, South Australia, Tasmania and the Northern Territory over the September quarter, with the largest increase in the Northern Territory (14.7%).
Compared to the corresponding quarter 2017, the number of first home buyers increased in New South Wales, South Australia, Tasmania and the Northern Territory, with the largest increase in Tasmania (25.1%).
The weighted average capital city median house price decreased to $751,411, a decrease of 1.6% over the quarter and a decrease of 1.5% over the past twelve months.