Rate reductions boost home affordability
NSW remains the least affordable state. Photo: Louie Douvis
Australian homes are the most affordable in three years, thanks to rising incomes and falling interest rates.
The Real Estate Institute of Australia’s (REIA) Housing Affordability Report shows that housing affordability improved in the December quarter, with the proportion of income required to meet loan repayments decreasing by 1.4 percentage points to 30.4 per cent.
The result is at its lowest level since December 2009.
REIA president Peter Bushby said housing affordability had been improving over the past year and a half as the Reserve Bank of Australia continued to cut the cash rate.
‘‘Rising income and declining mortgage repayments contributed to the improvement, with the median family income increasing 2.2 per cent and the average monthly loan repayments decreasing 2.1 per cent,’’ he said.
He said changes to the first home owner’s grant in NSW and Queensland had resulted in falls of 28.8 per cent and 10.4 per cent respectively in the number of first home buyers over the quarter.
NSW remains the least affordable state or territory to buy a home despite a fall in the proportion of income required to meet loan repayments of 0.5 percentage points to 36.0 per cent.
The Australian Capital Territory is still the most affordable state or territory to buy a home, with the proportion of income needed dropping 0.2 percentage points to 18.7 per cent.
All states and territories recorded improvements over the quarter, with the largest decline in the proportion of income required to buy a home in Queensland where it fell 1.9 percentage points to 28.1 per cent.