This article is from the Australian Property Journal archive
THIS week’s interest rate cut is expected to improve housing affordability further after better conditions in the March quarter, although a decline in rental affordability in South Australia and Tasmania offset improvement across the rest of the country.
The latest Adelaide Bank/REIA Housing Affordability Report found New South Wales had the largest improvement in housing affordability, although the proportion of income required to meet loan repayments remained at a high 35.4%.
The total number of loans declined by 20%, excluding refinancing, decreased to 86,909, which was not unusual for this time of year, but is 13.7% below levels seen in the first quarter of 2018.
“The number of those entering the home loan market also declined over the year. Interestingly, while loan size decreased for changeover buyers, it increased marginally for first home buyers,” REIA president Adrian Kelly said.
Kelly noted that the RBA’s decision yesterday to cut interest rates by 25 basis point rates would see a further improvement in affordability.
“Subject to the banks passing on the full cut, for a first home buyer this means a saving of $70 per month based on an average loan size of $338,000 in the March quarter of 2019.”
Rental affordability improved marginally in the larger states of New South Wales, Victoria and Queensland, as well as in Western Australia and the Northern Territory, but South Australia and Tasmania tipped the scales.
Housing affordability improved in NSW by 1.3% over the quarter, and the proportion of income required to meet monthly loan repayments decreasing by 1.1% over the year. The number of loans to first home buyers decreased to 5,790, a decrease of 24.2% over the quarter and of 11.0% over 12 months.
Rental affordability improved marginally in the March quarter. The proportion of earnings required to meet median rent payments is now 28.2%, 1.9% on 12 months.
In Victoria, housing affordability improved with decreases of 0.6% over the quarter and 1.6% over 12 months to 32.5%. Loans to first home buyers in Victoria was down 18.7% to 7,199, a year-on-year drop of 11.9%. Total loans were down 20.4% to 24,566.
Rental affordability in Victoria has improved modestly to 23.1%.
Queensland saw small improvement in housing affordability over the quarter to 27.5%, steady compared to the same quarter last year. The number of loans to first home buyers 17.4% to 4,677 over the quarter and by 17.1% compared to the same time. Loans decreased in Queensland to 17,979, 16.9% lower over the quarter and by 14.9% annually.
Small improvements have taken rental affordability 22.0%.
Housing affordability in South Australia improved by 0.6% and 0.3% over the quarter and past year respectively to 26.9% of income. First home buyer loans decreased 16.7% to 1,370, to be 5.6% above the March quarter in 2018. Total loans fell 14.5% to 6,503, 2.0% below one year ago.
Rental affordability in South Australia lifted by 0.8% over the quarter 22.8%, and is 0.4% above 12 months ago.
WA saw a 0.5% improvement in housing affordability to 22.6%, 1.0% more favourable for buyers than last year. The number of first home buyers fell by 13.6% in the quarter and 7.4% over 12 months to 3,313 in the March quarter, while the total number of loans decreased to 9,235, down 16.2% and 9.3% respectively.
Rental affordability improved slightly to 16.5%, although this is just above March 2018.
Housing became more affordable in Tasmania, with proportion of income required to meet loan repayments down 0.9% to 25.4%, but this is up 0.9% over one year. First home buyers dropped 12.8% to 475, but is up 13.1% compared to one year ago. New loans were down 12.9% to 2,245, and are 4.5% above March 2018.
Rental affordability in Tasmania declined, up 1.2% to 29.3% in quarterly and annual terms.
In the Northern Territory, housing affordability declined, up 0.8% to 20.2% to over the quarter, and 0.4% annually. The number of loans to first home buyers in the Northern Territory decreased to 187, a decrease of 28.4% over the March quarter but an increase of 12.7% compared to the March quarter 2018. The number of new loans was down 22.0% quarterly and 17.6% annually to 506.
Rental affordability in the Northern Territory improved 0.4% and 1.6% respectively to 20.9%.
The Australian Capital Territory saw a small improvement in housing affordability to 20.3%. First home buyer loans were down 44.8% over the March quarter and 43.0% in annual terms to 392. Total loans decreased to 1,952, by 31.0% over the quarter and 14.9% over 12 months.
Rental affordability has declined slightly, up 0.1% and 0.5% to 19.0%.
Australian Property Journal
