Getting into the property market is becoming easier
It’s getting easier to afford a house – and that’s official.
The latest Adelaide Bank/REIA Housing Affordability Report shows that housing affordability has been improving over the past two years, with the proportion of income required to meet repayments at 28.7% - the lowest in a decade.
“With the exception of the Northern Territory, all states and territories recorded improvements over the quarter, the largest being Queensland where the proportion of income required to meet loan repayments dropped by 1.9% to 26%,” Real Estate Institute of Australia president Peter Bushby said.
Because of its higher average incomes, the ACT is still the most affordable state or territory in which to buy a home, and NSW remains the least affordable with the proportion of income required to meet loan repayments 5.6% higher than the national average.
“Despite relatively low average loan sizes and rents, South Australia is one of the least affordable states or territories in which to buy or rent,’’ Bushby said.
“Affordability has improved in all states and territories when compared to the same time last year, and, no doubt, the seven interest rate cuts since November 2011 have played a role.
“Variable interest rates declined 0.2 percentage points - from 6.1% to 5.9% in the June quarter – which is a decrease of 0.7 percentage points compared to the same time last year.
Also, the three year fixed rate fell by 0.3% over the quarter and 0.9% compared to the June quarter 2012, to 5.1%.”
Bushby said more effort was required to entice first home buyers back into the market. Measures could include stamp duty reforms, access to superannuation and first home buyers’ assistance.
"They made up just 14.6% of the owner-occupier market - a persistently low number compared to the long-run average proportion of 20%,’’ he said.
“Victoria had the largest jump in the number of loans to first home buyers over the quarter and Western Australia the largest over the year.”
Rental affordability also improved with the proportion of income required to meet rent payments decreasing slightly to 23.7%.
The figures showed it is now more affordable to buy than rent in Tasmania.
See the Adelaide Bank/REIA Housing Affordability Report at www.reia.com.au
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The current policy solves a short-term problem by creating jobs in the building sector, but in the long run it is likely to place young first home buyers under financial pressure.