Despite falls in Victoria, South Australian and the ACT during the first quarter of 2018, a new report from the Real Estate Institute of Australia and the Adelaide Bank has found that affordability is improving.
The March quarter 2018 edition of the Adelaide Bank/REIA Housing Affordability Report found that the proportion of median family income required to meet average loan repayments has decreased to 31.3 per cent, a decrease of 0.3 percentage points.
However, despite this good news for Australian families under mortgage stress, rental affordability still continues to be a struggle according to the report.
The proportion of median family income required to meet rental payments has increased by 0.1 percentage points, landing at 24.8 per cent, with all states rising other than Western Australia and the Northern Territory.
“Western Australia and the Northern Territory were the only states or territories to show improvements in both rental and home purchase affordability,” said REIA President, Malcolm Gunning.
There was also a 16.0 per cent decrease in the number of loans across the country, with New South Wales and Victoria seeing the largest state-based decreases at 17.9 per cent.
“Whilst some decline in the number of loans for this period, which includes the summer holiday break, can be expected, the reduction reflects a changing sentiment in the market.
“In Sydney and Melbourne – the two cities which have had the largest price increases over the past few years – the drop in loans is attributable to APRA restrictions on investment loans and more stringent home lending criteria,” said Mr Gunning.
The report also found a decrease in the number of first home buyers, which dropped to 26,458, a decrease of 14.5 per cent during the quarter but an increase of 28.0 per cent compared to the March quarter 2017.
First home buyers now make up 17.8 per cent of the owner-occupier market and, if refinancing is excluded, the figure currently sits at 26.3 per cent.
