This article is from the Australian Property Journal archive
THE proportion of family income needed to meet an average home loan repayment has heached the highest level in 22 years and the situation is not any better for renters either, according to the Deposit Power/Real Estate Institute of Australia.
REIA president Noel Dyett said home owners continue to suffer following a sustained period of high interest rates and economic uncertainty.
The June quarter 2008 Housing Affordability Report shows a deterioration in both rental and home loan affordability across every state and territory in Australia for the first time since March 2004.
In June, the proportion of family income required to meet average home loan repayments rose to 39.8%. Home loan affordability deteriorated by 4.2% over the quarter and by 9.7% over the year.
Dyett said rental affordability also suffered as tight vacancy rates in all capital cities increased the proportion of income required to meet rent payments up from 24.7% in the previous quarter, up to 25.0% in the June quarter.
The worst states were New South Wales and Queensland where the proportion of income required to meet loan repayments increased to 42.6% and 41.0% respectively.
NSW has replaced QLD as the least affordable state after affordability by 7.5%, and 9.0% over the year, due largely to a decrease in median income, and increases in the average loan size, and average loan repayments. Tenants now require 26.4% of their median income to pay for rent.
In QLD, home loan affordability fell by 1.2% and by 10.6% over the year. However, rental affordability improved slightly with 26.3% of family income required to pay rent in the June quarter compared with 26.5% in the March quarter.
Over the year, South Australia saw the largest deterioration of home loan affordability falling 13.6%, and 4.0% over the quarter. The proportion of family income required to meet loan repayments increased to 38.4% as monthly loan repayments increased faster than any increases in median family income. However, rental affordability improved slightly with 25.4% of family income required to pay rent in the June quarter compared with 25.5% in the March quarter.
Meanwhile over the quarter, Northern Territory affordability decreased by 9.9%, the most significant deterioration of any state. Home owners required 25.5% of family income to meet loan repayments, where as renters required 29.0% of family income to pay for rent.
And Victorians required 38.2% of family income after affordability fell by 3.0% over the quarter and by 10.0% over the year. Victorian rental data was not ready at the time of publication.
In Tasmania, despite slight improvements in rental affordability, the state is still the least affordable in Australia to rent with 29.2% of the family income required to meet rent payments in the June quarter. Housing affordability deteriorated as Tasmanians required 38.2% of their income to meet loan repayments over the quarter, due largely to a decrease in the median family income.
Western Australia recorded the least deteriation in housing affordability over the past 12 months decreasing 3.0% over the year and 2.4% over the quarter. On average, West Australians required 34.9% of their family income to meet loan repayments in the June quarter, and renters required 23.3% of their income to pay for rent.
Finally the Australian Capital Territory continues to be the most affordable to own or to rent, due largely to the above average, median income. Home owners required 23.2% of the median income to meet loan repayments, and renters required 16.9% topay for rent. Housing affordability in the ACT deteriorated by 3.8% over the quarter and 11.9% over the year.
Dyett said there is a great deal of speculation that the Reserve Bank intends to cut official interest rates when it next meets today.
“This would be welcome news for home owners around the country who have been suffering under the strain of higher interest rates and increasing living costs for some time now,” he concluded.
Australian Property Journal
