Housing Affordability Report Joint ly Survey No. 94. ch Interest rate increases bite hard The title of the Deposit Power/Real Estate Institute of Australia Home Loan Affordability Report has been changed to the Housing Affordability Report, effective from ch. The report now includes data and commentary on rental affordability as well as home loan affordability, to take account of the changing levels of affordability in the rental property market. As interest rate increases begin to bite hard into household income, ch quarter data show a shift in the pattern of housing affordability across Australia. Queensland has replaced New South Wales as the least affordable state for new home loans. Queenslanders now require.5% of median weekly family income to service the average new home loan. Every state and territory recorded a decline in affordability in the year to ch, with an overall national decline of 8.7%. New South Wales and the Northern Territory were the only locations to record an improvement in home loan affordability during the ch quarter. The Australian Capital Territory experienced the largest quarterly decline in loan affordability, deteriorating by 5.5%, with an annual decline of 14.%. Over the year to ch, South Australia s deterioration in affordability was the greatest at 15.3%. The highest proportion of income required for rentals was recorded in Tasmania where 29.5% of median weekly family income was spent on rent. Western Australia is the only location where the proportion of income spent on rent fell during the ch quarter. The proportion of median weekly family income required to meet median weekly rent has risen by 8.3% across Australia in the year to ch, with increases recorded in every state and territory. This was most notable in the Northern Territory, where there has been a 37.1% increase in the proportion of income required for rent. There is likely to be a further negative impact on home loan affordability in the June quarter resulting from the recent Reserve Bank increases in interest rates, as well as the additional interest rate increases imposed by lenders during. Proportion of family income required to meet loan repayments, ch Median Weekly Family Income Proportion of family income required to pay loan $1488 34.% Repayments based on data for new borrowers. $1745 23.% $158 36.8% $1 35.3% $17.5% $126 39.3% $1284 37.1% Australia wide $1256 Rental affordability is also expected to deteriorate further around the country, as rents increase in response to extremely tight vacancy rates. FAST FACTS Proportion of family income required to meet: Home loan repayments 38.% Rent payments 24.7% Proportion of Family Income Required to Meet Loan Repayments Chart 1 shows the movement in the proportion of family income required to meet average home loan repayments since ch 1986. ACT 38.% $25 22.4% The Deposit Power/Real Estate Institute of Australia s Housing Affordability Report is based on data from all major lending institutions. It is a comprehensive and accurate assessment of the ability of Australians to meet the cost of home purchase.
HOUSING AFFORDABILITY REPORT CHART 1 % 35 3 25 15 Proportion of family income required to meet average loan repayments Australia Renters in Tasmania continue to be in the worst position, requiring 29.5% of family income to meet rent payments in the ch quarter. This is because the Tasmanian median income is the lowest in Australia, yet rents are relatively high at $295 per week for the ch quarter. Renting in Darwin is more expensive than buying. The proportion of family income required to meet rent payments is 28.1%, compared with 23.% required for home loan repayments. Darwin rents are the highest in Australia. Table 2: Proportion of income needed to meet rent payments 1 86 88 9 92 94 96 98 2 4 6 8 qtr qtr qtr NSW 25.4% 24.8% 23.2% VIC 21.8%.6%.5% QLD 26.5% 25.1% 24.1% Table 1: Proportion of income needed to meet loan repayments qtr qtr qtr NSW 39.3% 39.8% 35.9% VIC 37.1% 36.2% 33.5% QLD.5% 38.7% 36.% SA 36.8% 35.7% 31.1% WA 34.% 33.5% 33.7% TAS 35.3% 33.5% 32.1% NT 23.% 23.3% 22.8% ACT 22.4% 21.1% 19.2% AUS 38.% 37.4% 34.5% SA 25.5% 24.5% 24.1% WA 22.5% 23.3% 21.7% TAS 29.5% 28.4% 28.4% NT 28.1% 26.1%.5% ACT 17.5% 16.6% 15.9% AUS 24.7% 23.9% 22.8% CHART 2 % 25 24 23 22 Proportion of Median Weekly Family Income Spent on Rent 21 Rental Affordability With home loan affordability deteriorating significantly, many potential home buyers are remaining in the rental market. REIA vacancy rate data shows that demand for rental property remains extremely high in every state and territory. There is little prospect that this will improve in the short-term, particularly noting the downward trend in investor finance in response to recent interest rate rises. Table 2 shows rental affordability expressed as the proportion of median weekly family income required to meet weekly rent for a three bedroom house. The Australian weighted median rent for three bedroom houses is calculated using Census data, and median rents published in the Mortgage Choice/REIA publication, Real Estate ket Facts. In ch, the Australian weighted median rent for three bedroom houses was $31. per week, an increase of 4.7% over the quarter. Chart 2 shows that there was some volatility in rental affordability in the nine years to 5, although there was a general downward trend in the proportion of income required for rents from mid- 2. However, since mid-5, rents as a proportion of median weekly family income have moved strongly upwards with no sign that the upward movement will abate in the near future. Rents increased, not only in nominal terms, but also in relation to income, during the year to ch. Overall in Australia, renting families required 24.7% of their median family income to meet rent payments in the ch quarter. This compares with 22.8% of family income required for rent in ch, and 23.9% in ember. 19 1996 1997 1 2 3 4 5 6 First Home Buyers First home buyer participation in the market deteriorated markedly during the ch quarter, with first home buyers representing a 16.4% share of total housing finance commitments, a fall of 2% over the quarter. This compares with an average of.% over the 26 year period since July 1991. Excluding refinanced loans, first home buyers represented 25.4% of new borrowers in ch. There were 3,5 first home buyers in Australia in the ch quarter, a fall of 17.5% from the ember quarter, when there were 36,618 first home buyers. However, the ch quarter figures were similar to those of the ch quarter, when there were 3,986 first home buyers. In the ch quarter, the average loan to first home buyers fell slightly to $23,. The average loan size across all owner occupiers, excluding those who refinanced, was $246,647. First homebuyers share of all dwellings financed and the average size of their loans from the ch quarter 6 to the ch quarter are shown in Chart 3. 2
MARCH QUARTER REIA President s message From the minutes of the May meeting of the Board of the Reserve Bank, it is clear that the Bank is concerned there will be further inflationary growth, necessitating another round of interest rate rises. Data in this report demonstrate the impact of the interest rate rises, including both the official and the additional rises imposed by lenders. Home buyers have experienced a blowout in their mortgage repayments with new home loans now requiring 38% of family income to meet loan repayments. The average new loan, excluding refinancing, in the ch quarter was $246,647. Allowing for a % deposit, a loan of this size would enable a borrower to purchase a home valued at less than $31,. This is significantly lower than the median price in most cities, suggesting that borrowers purchasing a modest home require a significant proportion of income to meet their loan repayments. It is not much better to be a renter in the current property market. Australian Bureau of Statistics data show a significant decline in building approvals, following the recent interest rate rises. Without the additional housing stock urgently needed to address Australia s housing shortage, not only will home loan affordability suffer, but we can expect to see rental affordability reach new lows. Housing is a key driver in inflationary growth. The conundrum is that higher interest rates to address inflation will also push up the cost of housing, thus increasing the inflationary problem. It is hoped that an outcome of the Budget will be downward pressure on inflation to complement Government initiatives to address housing affordability such as the First Home Savers Account and the National Rental Affordability Scheme. Lenders also have to play their part with more rigorous lending practices, to ensure that those borrowing have the capacity to repay their loans, and are not creating negative equity in homes used as collateral for other household borrowings. Consumers must also carefully factor in potential rate rises and shifting house prices in their financial planning for home purchases and investments. Noel Dyett President, REIA Deposit Power Following the fourth official interest rate rise in seven months, we have seen mortgage default rates reach record levels in many Australian regions. Mortgage stress is also at alltime highs, with many property owners forced to make changes to their household finances to absorb any of the further predicted rises in interest rates, food costs and petrol prices. Unfortunately, the hardest hit by these increases will be those who have over-committed financially on their mortgage and are now in negative equity due to falling house prices. Some suburbs in Western Sydney are facing mortgage defaults that are at crisis levels. We have previously questioned whether competitive pressures from the mortgage industry could be a reason that seemingly high income earners have found themselves with debts they re not capable of repaying. But it s not all doom and gloom. Potential home buyers are now more educated and aware of how much they can afford to borrow to ensure they will be able to meet repayments, even if faced with possible interest rate rises. Changes in strategy which have resulted from the US mortgage crisis could also mean better home loan deals as lenders create customised packages in an effort to retain customers. We are still seeing record income and employment levels throughout much of the country. With the rental squeeze and rising demand for rental properties, investment property is looking like an attractive option especially as cashed-up investors are looking to exit the stock market and invest elsewhere. It is difficult to predict how property values will fluctuate in the short term, but over time property has proven to be a sound long term investment. Property owners should not panic and should try to hold on to their asset which is likely to appreciate in value. To find out how Deposit Power can assist when purchasing residential property, please contact our Helpline 18 678979 or visit www.depositpower.com.au Keith Levy National Manager, Deposit Power 3
HOUSING AFFORDABILITY REPORT CHART 3 $ 25 245 2 235 23 225 2 215 21 5 First Home Buyers Share of All Dwellings Financed 6 May 6 Percentage of all dwellings financed % Jul 6 Sep 6 Nov 6 Jan 7 7 Source: ABS Catalogue No. 569. May 7 Average loan size $' % Factors Influencing Home Loan Affordability A range of factors influences home loan affordability, including the following: The amount to be borrowed reflects the price of the property being purchased and the borrower s equity situation. The size of loan, interest rates and the period of the loan determine the average loan repayment. The ability to repay the mortgage depends upon the family income. Chart 4 shows the relationship between the Australian weighted average median house price, median weekly family income and average loan size. CHART 4 House Prices and Income $ $ 5 45 35 3 25 Jul 7 Sep 7 Nov 7 Jan 8 8 19 18 17 16 15 14 1 1 1 8 6 Median House Prices Although house prices increased across Australia in the year to ch, and by significant amounts in many locations, interest rate increases have already made their mark on the market, with price falls recorded in several cities, notably Melbourne and Canberra, during the ch quarter. Only two capital cities have a median of more than $45, as opposed to four capital cities in the last quarter. Detailed data on median prices for houses and other dwellings is available in the Mortgage Choice/ REIA Real Estate ket Facts report. Median Family Income The national median weekly family income increased by 1.5% over the ch quarter, to reach $1,256 (or $5,442 per month). Over the year to ch, the median weekly family income rose 5.5%. The average monthly home loan repayment rose by 16.2% over the year to reach $2,7, thus again outstripping income growth and contributing to declining affordability. The proportion of family income needed to pay the mortgage increased nationally from 37.4% in the ember quarter to 38.% in ch. This is the highest proportion recorded since the REIA started to calculate affordability data. Average Loan (All Borrowers) The national average new home loan (excluding refinancing) of $246,647 in the ch quarter was 2.4% lower than the average loan in the ember quarter, and 4.9% higher than in the ch quarter. The national average loan repayment in ch increased by 3.1% to $2,7. The total number of loans issued nationally over the quarter decreased by 15.% to 118,722 loans. Over the year to ch, the total number of home loans issued decreased by 5.5%. Interest Rates The Reserve Bank announced a 25 basis point increase in the cash rate in both February and ch, bringing the cash rate to 7.25%. Standard variable lending rates increased accordingly, as lenders responded to the RBA s increased cash rate. A number of lenders also announced additional increases. Fixed interest rates also increased amongst all lenders, reflecting market sentiment that the Reserve Bank might raise interest rates again, in response to inflationary pressures in the economy. 15 1 Sep Jun Sep Jun Sep Jun Sep Jun Sep Jun 3 4 5 6 Med Wtd Ave Price Med Weekly Family Income Ave Loan Size 4
MARCH QUARTER The average variable interest rates were: 9.19%, a.78% increase from the ember quarter. Permanent 9.1%, a.6% increase from the ember quarter. 8.76%, a.57% increase from the ember quarter. The average fixed (3 year) interest rates were: 8.89%, a.57% increase from the ember quarter. Permanent 8.92%, a.62% increase from the ember quarter. 8.87%, a.6% increase from the ember quarter. Chart 5 shows the relationships and the movements of the RBA cash rate, the average standard variable rate and the average three-year fixed rate by quarters over the last five years. CHART 5 % 9 8 7 6 5 4 3 3 Sep 3 4 ly Interest Rates Sep 4 5 Sep 5 6 Sep 6 7 Sep 7 8 Table 3: Home Loan Affordability Indicators qtr qtr qtr NSW 25.4 25.1 27.9 VIC 27. 27.6 29.9 QLD 24.7 25.8 27.8 SA 27.2 28. 32.1 WA 29.4 29.8 29.6 TAS 28.4 29.9 31.1 NT 43.5 42.9 43.8 ACT 44.7 47.3 52. AUS 26.3 26.7 28.8 Table 4: Percentage Change in %Change: '7-8 %Change: '7 '8 NSW 1.2-9. VIC -2.2-9.7 QLD -4.3-11.2 SA -2.9-15.3 WA -1.3 -.7 TAS -5. -8.7 NT 1.4 -.7 ACT -5.5-14. AUS -1.5-8.7 Av. Var Rate Av 3yr Fixed rate RBA Cash Rate Home Loan Affordability Indicator The Home Loan Affordability Indicator () is the ratio of median family income to average loan repayments. An increasing value reflects improving affordability of housing loans. Table 3 shows the s for Australia and each of the States and Territories for the ch quarter, compared with the preceding quarter and the ch quarter. Percentage changes are shown in Table 4. A long-term series of the quarterly movements in the Home Loan Affordability Indicator from ember 1987 is shown in Chart 6. 5
HOUSING AFFORDABILITY REPORT CHART 6 CHART 7 55 Home loan affordability indicator over time Rent $ 35 Australian Rent and from ch 1994 5 45 35 3 25 18 16 1 1 1 3 15 8 25 1 6 8 7 6 5 4 3 2 1 99 98 97 96 95 94 93 92 91 9 89 88 5 1994 1995 1996 1997 1 2 3 4 5 6 Weighted Median Rent Table 5: AUSTRALIA Home Loan Affordability Indicator () 26.3 26.7 28.8 Average since ch quarter 198 39.8 39.9.3 meeting average loan repayments 38.% 37.4% 34.5% meeting median rents 24.7% 23.9% 22.8% Median weekly family income $1,256 $1,238 $1,19 Average monthly loan repayment $2,7 $2,8 $1,781 Average loan $246,647 $252,75 $235,211 Total number of loans (excl. refinancing) 118,722 139,696 125,578 Number of first home buyers 3,5 36,618 3,986 Average first home buyer loan $23, $234, $229, Average loan $251,541 $256,342 $236,246 Standard variable interest rate 9.19% 8.41% 7.91% Fixed interest rate 8.89% 8.32% 7.31% Average loan $21,661 $226,793 $221,6 Standard variable interest rate 9.1% 8.41% 7.85% Fixed interest rate 8.92% 8.3% 7.29% Average loan $214,226 $231,895 $232,169 Standard variable interest rate 8.76% 8.19% 7.57% Fixed interest rate 8.87% 8.27% 7.43% Percentage Change Since previous quarter -1.6 1.3 Since corresponding quarter last year -9.2 4.2 6
MARCH QUARTER Table 6: NEW SOUTH WALES Home Loan Affordability Indicator () 25.4 25.1 27.9 Average since ch quarter 198 34.6 34.7 35. meeting average loan repayments 39.3% 39.8% 35.9% meeting median rents 25.4% 24.8% 23.2% Median weekly family income $1,26 $1,249 $1,6 Average monthly loan repayment $2,146 $2,155 $1,876 Average loan $255,686 $271,232 $247,753 Total number of loans (excl. refinancing) 35,7 42,74 36,49 Number of first home buyers 8,675 1,783 9,53 Average first home buyer loan $248,9 $264,7 $239,5 Average loan $26,315 $275,96 $247,389 Average loan $6,244 $226,466 $7,578 Average loan $231,52 $248,644 $258,363 Percentage Change Syd New South Wales New South Wales was only one of two states and territories that recorded an improvement in home loan affordability for the ch quarter. Affordability improved by 1.2% over the quarter driven by substantial decreases in the size of new home loans. However it decreased by 9.% over the year. Median weekly family income increased slightly by.9%, while average monthly loan repayments decreased by.4%. The proportion of family income required to meet average loan repayments in NSW decreased slightly to 39.3%. NSW has been overtaken by Queensland as Australia s least affordable location for home buyers. There are signs in the ch quarter that consecutive interest rate rises are beginning to have a stabilising affect on the cost of housing. The cost of rent in NSW continues to grow and the proportion of income needed to meet rent payments increased by.6% to 25.4% in the ch quarter. Since previous quarter 1.2 1.4 Since corresponding quarter last year -9. 3.9 CHART 8: New South Wales ly value Long term average 35 35 3 3 25 25 15 15 1 1 5 5 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 9: New South Wales Rents Rent and for Sydney from ch 165 Rent $ per week 35 3 25 15 16 155 15 145 1 135 13 125 Consumer Price Index 1 1 2 3 4 5 6 1 Other dwellings Houses 7
HOUSING AFFORDABILITY REPORT Table 7: VICTORIA Home Loan Affordability Indicator () 27. 27.6 29.9 Average since ch quarter 198 42.7 42.8 43.2 meeting average loan repayments 37.1% 36.2% 33.5% meeting median rents 21.8%.6%.5% Median weekly family income $1,284 $1,264 $1,221 Average monthly loan repayment $2,64 $1,982 $1,773 Average loan $245,937 $249,489 $234,64 Total number of loans (excl. refinancing) 26,6 31,463 26,434 Number of first home buyers 8,7 9,78 7,651 Average first home buyer loan $216,9 $221,9 $217, Average loan $25,582 $253,551 $237,4 Average loan $25,646 $251,817 n/a Average loan $,93 $215,474 n/a Percentage Change Melb Since previous quarter -2.2 1.3 Since corresponding quarter last year -9.7 4.4 Victoria Loan repayments increased more than income in Victoria during the ch quarter, causing a deterioration in home loan affordability of 2.2%. Overall, the Victorian decreased by 9.7% over the year. Victorian median weekly family income increased by 1.6% and average monthly home loan repayments rose by 4.1%, causing the proportion of family income required to meet the average loan repayment to increase from 36.2% to 37.1%. Significantly, the total number of home loans issued in Victoria decreased by 15.4% over the quarter, while the average size of a new loan decreased by 1.4%. The proportion of income needed to meet rent payments increased from.6% in ember to 21.8% in ch. CHART 1: Victoria 5 45 35 3 25 15 1 5 5 Jun 5 Sep 5 ly value 5 6 Jun 6 Sep 6 Long term average 6 7 Jun 7 Sep 7 7 8 5 45 35 3 25 15 1 5 CHART 11: Victoria Rents 3 28 Rent and for Melbourne from ch 165 16 155 Rent $ per week 26 2 2 15 145 1 135 Consumer Price Index 13 18 125 16 1 2 3 4 5 6 1 Other dwellings Houses 8
MARCH QUARTER Table 8: QUEENSLAND Home Loan Affordability Indicator () 24.7 25.8 27.8 Average since ch quarter 198.8.9 41.3 meeting average loan repayments.5% 38.7% 36.% meeting median rents 26.5% 25.1% 24.1% Median weekly family income $1,7 $1,197 $1,161 Average monthly loan repayment $2,1 $2,9 $1,813 Average loan $252,566 $252,828 $239,367 Total number of loans (excl. refinancing) 27,11 32,114 3,836 Number of first home buyers 6,391 8,277 7,976 Average first home buyer loan $235,8 $241,3 $232,1 Average loan $256,531 $255,338 $239,84 Average loan $9,276 $217,18 $9,8 Average loan $221,521 $241,155 $248,197 Percentage Change Bris Since previous quarter -4.3 1.3 Since corresponding quarter last year -11.2 4.8 Queensland The proportion of family income required to meet average loan repayments in Queensland increased to.5% in the ch quarter, making it the least affordable state or territory in Australia. Home loan affordability fell by 4.3% over the quarter and by 11.2% over the year. The median weekly family income increased by.8% while average monthly loan repayments, exacerbated by consecutive rate rises, increased 5.5%. The number of home loans issued during the ch quarter decreased significantly by 15.6%, and their average value decreased by.1%, suggesting a steadying of the market. Rental affordability in Queensland shows no sign of improving as the proportion of income needed for rent increased from 25.1% in the ember quarter to 26.5% in the ch quarter. CHART 12: Queensland 5 ly value Long term average 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 13: Queensland Rents Rent and for Brisbane from ch 3 17 3 165 Rent $ per week 28 26 2 2 18 16 155 15 145 1 135 13 Consumer Price Index 16 125 1 1 2 3 4 5 6 1 Other dwellings Houses 9
HOUSING AFFORDABILITY REPORT Table 9: SOUTH AUSTRALIA Home Loan Affordability Indicator () 27.2 28. 32.1 Average since ch quarter 198 42.3 42.4 42.8 meeting average loan repayments 36.8% 35.7% 31.1% meeting median rents 25.5% 24.5% 24.1% Median weekly family income $1,58 $1,6 $1,37 Average monthly loan repayment $1,685 $1,641 $1,399 Average loan $,744 $6,565 $184,788 Total number of loans (excl. refinancing) 1,187 11,725 11,62 Number of first home buyers 2,7 2,234 2,138 Average first home buyer loan $193, $195, $187,1 Average loan $3,181 $6,3 $183,985 Average loan $27,417 n/a $149,447 Average loan $19,453 n/a $188,148 Percentage Change Adel Since previous quarter -2.9 1.5 Since corresponding quarter last year -15.3 4.5 South Australia South Australia has seen the largest deterioration of home loan affordability anywhere in Australia with the falling 15.3% over the year. The fall over the quarter moderated slightly with a decrease of 2.9%. South Australia was one of only two state and territories to record a decrease in median weekly family income for the ch quarter, if only a small decrease of.2%. The number of loans issued in South Australia during the ch quarter decreased by 13.1% from the previous quarter, and the size of the loan also decreased by 1.5%. Despite a decrease in the size of the loan, loan repayments in South Australia increased by 2.7% because of consecutive interest rate rises and a decrease in median family income. This led to an increase in the proportion of family income needed to meet average loan repayments from 35.7% in the ember quarter to 36.8% in the ch quarter. The proportion of median weekly family income required for rent increased over the quarter from 24.5% in ember to 25.5% in ch. CHART 14: South Australia 5 ly value Long term average 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 15: South Australia Rents Rent $ per week 29 27 25 23 21 19 17 15 13 Rent and for Adelaide from ch 17 165 16 155 15 145 1 135 13 125 Consumer Price Index 11 1 2 3 4 5 6 1 Other dwellings Houses 1
MARCH QUARTER Table 1: WESTERN AUSTRALIA Home Loan Affordability Indicator () 29.4 29.8 29.6 Average since ch quarter 198 46.1 46.2 46.7 meeting average loan repayments 34.% 33.5% 33.7% meeting median rents 22.5% 23.3% 21.7% Median weekly family income $1,488 $1,416 $1,288 Average monthly loan repayment $2,195 $2,59 $1,884 Average loan $261,524 $259,161 $248,716 Total number of loans (excl. refinancing) 14,252 16,12 15,163 Number of first home buyers 3,93 4,3 3,14 Average first home buyer loan $233, $235,8 $215, Average loan $264,646 $258,419 $247,782 Average loan n/a n/a n/a Average loan n/a n/a n/a Percentage Change Perth Since previous quarter -1.3 1.4 Since corresponding quarter last year -.7 4.3 Western Australia Home loan affordability in Western Australia worsened slightly over the ch quarter, due mainly to larger loans and higher interest rates. The number of new home loans decreased by 11.5% during the ch quarter, while the average size of a new home loan increased by.9%. Median weekly family income increased by 5.1%, compared with a 6.6% increase in the average monthly loan repayments. The proportion of income needed for loan repayments increased by.5 percentage points over the quarter to 34.%. The overall effect was that the worsened by 1.3% over the quarter, and by.7% over the year. This small annual change was similar to that recorded for Northern Territory, and is the lowest level of deterioration across Australia. Renters were fortunate this quarter with a.8% decrease in the proportion of income needed to meet rent payments. Renters require 22.5% of family income to meet rent payments. CHART 16: Western Australia 5 ly value Long term average 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 17: Western Australia Rents Rent and for Perth from ch 3 165 Rent $ per week 27 2 17 16 155 15 145 1 135 13 125 1 Consumer Price Index 1 1 2 3 4 5 6 115 Other dwellings Houses 11
HOUSING AFFORDABILITY REPORT Table 11: TASMANIA Home Loan Affordability Indicator () 28.4 29.9 31.1 Average since ch quarter 198 48.9 49.1 49.6 meeting average loan repayments 35.3% 33.5% 32.1% meeting median rents 29.5% 28.4% 28.4% Median weekly family income $1, $986 $949 Average monthly loan repayment $1,528 $1,43 $1,321 Average loan $182,72 $179,993 $174,486 Total number of loans (excl. refinancing) 2,85 2,915 2,57 Number of first home buyers 585 616 474 Average first home buyer loan $171, $162,5 $159, Average loan $191,259 $183,578 $18,44 Average loan n/a n/a n/a Average loan n/a n/a n/a Percentage Change Hob Since previous quarter -5. 1.3 Since corresponding quarter last year -8.7 3.8 Tasmania Tasmanian home loan affordability decreased yet again in the ch quarter as small increases in median income failed to match the increase in average loan repayments. Median weekly family income increased in Tasmania by 1.4% while the average monthly loan repayment increased by 6.9%. The proportion of family income needed to meet the average mortgage repayment increased by 1.8 percentage points. The average size of home loans in Tasmania increased by 1.2% over the quarter, and the number of loans issued decreased by 3.8%. Tasmania experienced the highest decline in housing affordability over the quarter with the decreasing by 5.%, and by 8.7% over the year. Renters in Tasmania are the worst off in Australia, with 29.5% of their income needed to pay the median rent in Hobart. This is up 1.1 percentage points from the ember quarter. CHART 18: Tasmania 6 ly value Long term average 6 5 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 19: Tasmania Rents Rent $ per week 3 28 26 2 2 18 16 1 1 Rent and for Hobart from ch 165 16 155 15 145 1 135 13 125 Consumer Price Index 1 1 2 3 4 5 6 1 Other dwellings Houses 12
MARCH QUARTER Table 12: NORTHERN TERRITORY Home Loan Affordability Indicator () 43.5 42.9 43.8 Average since ch quarter 198 58.8 58.9 59.5 meeting average loan repayments 23.% 23.3% 22.8% meeting median rents 28.1% 26.1%.5% Median weekly family income $1,745 $1,721 $1,661 Average monthly loan repayment $1,739 $1,738 $1,643 Average loan $7,198 $218,75 $217,18 Total number of loans (excl. refinancing) 925 1,226 1,113 Number of first home buyers 2 262 272 Average first home buyer loan $216, $212,8 $9,1 Average loan $214,851 $229,21 $228,362 Average loan n/a n/a n/a Average loan n/a n/a n/a Percentage Change Dar Since previous quarter 1.4.9 Since corresponding quarter last year -.7 3.9 CHART : Northern Territory Northern Territory Along with NSW, NT was the only State or Territory to record an improvement in affordability during the ch quarter of 1.4%. Over the year, there was only a small decline in affordability of.7%, similar to that recorded in Western Australia, another location which has benefited from increased incomes as a result of the commodities boom. There was a significant decrease in the number and size of new loans in the ch quarter. The total number of new loans issued in the ch quarter decreased a staggering 24.6% and the average loan size decreased by 5.3%. Median weekly family income rose by 1.4% in the ch quarter. Coupled with the.1% increase in average monthly loan repayments, the proportion of family income required to meet the average loan repayment decreased by.3%. The Northern Territory remains the second most affordable location for home loans in Australia. However, it is more expensive to rent than to buy in Darwin. Rental affordability decreased even further in the ch quarter, with the proportion of income required for rent payments rising to 28.1%. 7 ly value Long term average 7 6 6 5 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 21: Northern Territory Rents 5 Rent and for Darwin from ch 16 45 155 Rent $ per week 35 3 25 15 145 1 135 13 125 Consumer Price Index 15 1 2 3 4 5 6 1 Other dwellings Houses 13
HOUSING AFFORDABILITY REPORT Table 13: AUSTRALIAN CAPITAL TERRITORY Home Loan Affordability Indicator () 44.7 47.3 52. Average since ch quarter 1987 59.1 59.2 59.5 meeting average loan repayments 22.4% 21.1% 19.2% meeting median rents 17.5% 16.6% 15.9% Median weekly family income $2,5 $2,228 $2,151 Average monthly loan repayment $2,1 $2, $1,792 Average loan $255,14 $256,752 $236,65 Total number of loans (excl. refinancing) 1,753 2,77 1,874 Number of first home buyers 39 398 8 Average first home buyer loan $244,3 $242,9 $238,1 Average loan $252,29 $251,392 $237,236 Average loan n/a n/a n/a Average loan n/a n/a n/a Percentage Change Can Since previous quarter -5.5 1.4 Since corresponding quarter last year -14. 4.6 Australian Capital Territory The ACT continues to enjoy the best home loan affordability in the country, due largely to higher than average incomes. Despite this, the ACT experienced the highest quarterly decrease in home loan affordability across Australia, declining by 5.5% in the ch quarter. Affordability decreased 14.% over the year. The decrease in affordability is due mainly to a reduction in the median weekly family income of 1.%. The proportion of family income required to meet the average loan repayment increased to 22.4%. The number of new loans decreased by 15.6% over the ch quarter, and the size of new loans decreased by.7%. The proportion of income spent on rent in the ACT increased.9% from the ember quarter to 17.5%, placing the ACT as the most affordable location for renters despite having the second highest rents in the country. CHART 22: Australian Capital Territory 7 ly value Long term average 7 6 6 5 5 3 3 1 1 5 Jun 5 Sep 5 5 6 Jun 6 Sep 6 6 7 Jun 7 Sep 7 7 8 CHART 23: Australian Capital Territory Rents Rent and for Canberra from ch 165 Rent $ per week 35 3 25 16 155 15 145 1 135 Consumer Price Index 15 13 125 1 1 2 3 4 5 6 1 Houses Other dwellings 14
MARCH QUARTER The Deposit Power/Real Estate Institute of Australia Housing Affordability Report is based on data from all major lending institutions. It is a comprehensive and accurate assessment of the ability of Australians to meet the cost of home purchase. Any differences between information contained in this and previous editions of the Home Loan Affordability Report are due to revisions in the database that may be necessary from time to time. Home Loan Affordability Indicator: A ratio of family income to average loan payments. (An increase denotes easier affordability). The divided by a (constant) factor of 1 is the number of times by which median family income exceeds average home loan repayments in a full year. The reciprocal value of the is the proportion of family income that is required to repay the average home loan in a full year. Loans: Average size and total number for first home buyers and all borrowers (excluding refinancing) are average data over the quarter, based on all lender data from the ABS. Average Monthly Loan Repayment: Loan repayment figures are calculated from data provided by the ABS, Cannex Pollfax, and financial institutions across Australia. Median Weekly Family Income: A family is defined as a married couple with or without dependant children. The major part of family income is adult wages and salaries. Income data are sourced from ABS records, and updated on the basis of movements in average weekly earnings. ly Median House Prices/ly Median Vacancy Rates: House price and vacancy data are taken from the REIA/ Mortgage Choice quarterly Real Estate ket Facts. Proportion of Family Income to Meet Rent Payments: The percentage of Median Weekly Family Income required to meet the median rent for a three bedroom house. Rents are obtained from the REIA/ Mortgage Choice quarterly Real Estate ket Facts. 15
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