Australian Property News

Housing affordability tumbles

Posted on Wednesday, December 08 2010 at 11:16 AM

Housing affordability has dropped more in the past 12 months than any other year in the past decade. The Real Estate Institute of Australia (REIA) says the proportion of income required to meet loan repayments increased by 5.8 percentage points to 34.8 per cent in the year to September 2010. Despite the decline, some states and territories experienced a moderate improvement in affordability over the quarter, with the exception of the Australian Capital Territory, Queensland and Victoria.

While the average quarterly standard variable rate remained unchanged, average quarterly fixed rates declined moderately, enough to record the largest quarterly decrease observed during the year.

The REIA says although the ACT recorded a decline in housing affordability, it still remained the most affordable state or territory to own a home, with the proportion of income required to meet loan repayments increasing 0.8 percentage points to 18.8 per cent. New South Wales remained the least affordable state or territory, with the proportion of income required to meet loan repayments decreasing 0.3 percentage points to 37.7 per cent. Compared to the same quarter of the previous year, all states and territories recorded a decline in housing affordability, with the largest decreases in New South Wales and Victoria.

REIA says the total number of loans continued to decrease during the quarter, down 2.9 per cent to 101,364. All states and territories experienced decreases in the total number of loans, with the largest decrease in the Northern Territory. Over the year, the total number of loans fell 28.3 per cent. This is the largest annual decline in Australia since March 2001.

Loans to first homebuyers also decreased, down 2.8 per cent to 22,823 over the quarter. In fact, despite government incentives, the September quarter experienced the lowest quarterly participation of first homebuyers for the past six years.

REIA says the Northern Territory recorded the greatest drop in the number of loans to first homebuyers for the September quarter, down from 165 to 146. The ACT, Queensland and South Australia were the only states or territories to record an increase in the number of loans to first homebuyers.