Small drop in housing affordability as prices rise

There was a small fall in housing affordability over the June quarter despite the Reserve Bank's further reduction in the cash rate of 0.25 percentage points early in the period.


The Real Estate Institute of Australia's Housing Affordability Report showed the impact of rising prices offset the lower rates throughout the quarter.


The Australian Capital Territory remained the most affordable state or territory in which to own a home - according to the Index, with the proportion of income required to meet loan repayments at 17.3%; a figure well below the national average.


New South Wales remained the least affordable state or territory in which to own a home, with the proportion of income required to meet loan repayments at 31.1%. The state or territory that showed the greatest improvement in housing affordability was Tasmania, with the proportion of income required to meet loan repayments decreasing 0.6 percentage points.


Even with the slight drop in affordability, the data suggests the dream of owning a home has become a lot more realistic compared to last year when the national average for the proportion of income required to meet loan repayments hovered in the high 30s.


More loans, more first home buyer interest

The data also showed a considerable increase in the total number of loans (excluding refinancing) over the June quarter.


In the March quarter 2009 there were 119,358 loans recorded, however, by the end of the June quarter, this had increased by 20%, taking the number of loans to 143,292.


First home buyers, encouraged by the stimulus package and low interest rates, led the charge with their numbers up 19.4%, reaching 54,924; the highest since the September quarter of 1991 and an increase of 94.3% year-on-year.

Posted Friday 11th of September 2009, 5:37 PM