New South Wales
New South Wales’ home loan affordability has increased by 3.7% over the past 12 months, to 27.7 index points. Although still the lowest index reading compared to the rest of Australia, its affordability growth is on par with Queensland (3.6%).
A key finding for New South Wales is in relation to potential future demand for residential real estate, as net migration has increased by 22.9% over the past 12 months to December 2016, currently at 16,600 people. Dwelling approvals in June 2017 is recorded at 5628, which is a 6.8% decrease over the past three months, and a 14.2% decrease over the past 12 months. This suggests a potential undersupply in the market, a welcome news not only for astute investors but also developers looking for new residential and/or mixed-use projects.
New South Wales recorded the lowest home loan affordability index point of 27.7, below the Australian average of 32.9 index points. Not surprisingly the number of first home buyer loans has decreased by 5.2% over the past 12 months, currently at 3597. That said NSW approves a higher number of first home buyer loans than South Australia, Tasmania, Northern Territory, and the ACT; all of which has a lower median property price than NSW.
ACT
The Australian Capital Territory records the highest home loan affordability index reading, at 49.7 points. This exponentially surpasses the Australian average of 32.9 index points. They also record the highest weekly family income at $2619, suggesting ACT residents are benefitting from a balanced equilibrium of property prices and wage growth.
Interestingly ACT records the second highest decline in the number of first home buyer loans, decreasing by 8.9% over the past 12 months to 381 loans in March 2017. This can be attributed to first home buyers being priced out of the market by seasoned investors, or their preference to invest in other states – for example Queensland and Tasmania, due to lower property prices. The government sector is the largest employer in ACT, and with an increasing amount of jobs moving towards a contract role, this may have played a role in young professionals opting to not purchasing properties.
Western Australia
A key finding for Western Australia is in relation to affordability, which has increased by 4.9% over the past 12 months to March 2017. The growth in Western Australia’s affordability is above the Australian average (4.4%), suggesting that now is the time to seriously consider the Perth market. Interstate investors are currently doing so, potentially explaining why the number of first home buyer loans have decreased to 3562 in March 2017. That said this is only a 1.8% decrease, considerably below New South Wales (-5.2%), Tasmania (-11.1%), and ACT (-8.9%).
Victoria
Victoria records the 2nd highest in home affordability growth, at 6.6% over the past 12 months to March 2017; and the 2nd highest growth in nett migration – by 25.9% over the past 12 months to December 2016.
A key finding for Victoria is in relation to potential future demand for residential real estate, as net migration has increased by 25.9% over the past 12 months to December 2016, currently at 23,447 people. This is the 2nd highest growth out of all the states, and even higher than NSW (22.9%).
Dwelling approvals in March 2017 is recorded at 5036, which is a decrease of 6.8% over the past 3 month, 14.2% over the past 12 months. This suggests a true potential for undersupply in the market, a welcome news for astute investors and developers looking to plan for their next residential and/or mixed-use projects.
Tasmania
Tasmania leads the way in dwelling approvals, increasing by 19.9% over the past 12 months to 205 approvals in June 2017. This is good news for the market, as it services both interstate investor interest and local first home buyers.
A key finding for Tasmania is in relation to affordability, which has increased by 2.9% to 42.3 index points in March 2017. This increase is quite low compared to NSW (3.7%), VIC (6.6%), and QLD (3.6%); which is surprising as property prices in Tasmania is considerably lower than other capital cities such as Sydney Melbourne and Brisbane. Interstate investors have increased over the past 12 months in Tasmania, partially contributing to affordability for local residents and the decrease of 11.1% in first home buyer loans.
South Australia
South Australia records the third largest growth in home loan affordability, at 4.7%, behind Northern Territory (10.2%) and Western Australia (4.9%). That said this remains above the Australian average of 32.9 index points, suggesting South Australia holds its place as an attractive option for interstate investors.
The number of loans to first home buyer continues to grow in South Australia, 3.3% over the past 12 months to 1207 loans in March 2017. This is good news for local first home buyers, who may be wary of competition from investors.
Queensland
Property demand will increase the most in Queensland, as net migration figures increased by an exponential 60.9%, from 5661 in December 2015 to 9111 in December 2016.
Queensland maintains its affordability reputation, increasing by 3.6% over the past 12 months to 37.4 index points. Not surprisingly, Queensland records the second highest increase in the number of loans to first home buyers over the past 12 months, of 8.5%. Queensland’s affordability index is above the Australian average of 32.9 index points, explaining why many southern investors (i.e NSW and VIC) are choosing to purchase in Queensland.
Northern Territory
Northern Territory leads the way in home loan affordability, the only state recording double digit growth of 10.2% over the past 12 months to March 2017. The NT also leads the way in first home buyer loans growth, at 11.3%.
NT is the only state to have recorded a double digit growth over the past 12 months to March 2017.
