Housing affordability improves

Simon Parker

New data showing an improvement in housing affordability during the June quarter comes as property stock levels begin to rise across most capital cities.

As per the Adelaide Bank/Real Estate Institute of Australia (REIA) Housing Affordability Report, the average monthly loan repayment is now $2,155 compared to $2,290 in the June Quarter 2011.  

In addition, median weekly family income is now $1,560, compared to $1,493 in the June Quarter 2011.

Speaking about the report, REIA president Pamela Bennett said: “The June quarter 2012 recorded an improvement in housing affordability with the proportion of income required to meet loan repayments decreasing 0.8 percentage points to 31.9 per cent.”

“Largely due to a higher average income, the Australian Capital Territory remained by far the most affordable state or territory in which to buy a home, with the proportion of income required to meet loan repayments at 17.2 per cent. 

“New South Wales remained the least affordable state or territory in which to buy a home with the proportion of income required to meet loan repayments decreasing to 37.4 per cent.”

“Compared to the 2011 June quarter, all states and territories recorded improvements in housing affordability. The largest decreases in the proportion of income required to meet loan repayments were evident in Tasmania and Victoria, down 4.7 and 4.3 percentage points respectively.”

Adelaide Bank’s general manager Damien Percy said the figures indicate that many people are now deciding to get on with their lives and are again making decisions about their housing choices.

“I think simple timing is a factor,” he said. “Age waits for no-one. Older people in bigger houses make lifestyle choices to ‘downsize’, younger people have growing families and need to upsize.  The imperative to ‘right-size’ your dwelling at a particular life stage can drive decision-making to an extent,” he said.

“Many people have been delaying these important choices and housing decisions for nearly five years.  

“In June 2011, 35.4 per cent of family income was required to meet home loan repayments. In the June Quarter 2012, the figure had come down to 31.9 per cent – a 3.5 percentage point drop.

“This is still a significant chunk of family income, but moving nonetheless to relieve some of the pressure on household budgets. Appropriate and affordable housing underpins stable and successful communities and we forget this at our peril.”

The report also revealed that the number of loans to first home buyers increased in all states and territories with the exception of New South Wales and the Northern Territory.

Victoria was the standout, recording the largest increase in the number of first home buyers for the quarter, up by 23.5 per cent. Victoria also recorded the largest increase in the total number of loans, up by 16.0 per cent. 

The report comes at the same time figures from property research house SQM Research reveal that the level of residential stock around the nation rose slightly during the month of August 2012, increasing by 1.5 per cent and coming to a total of 373,510.

SQM Research reported that Canberra, Sydney and Melbourne all recorded substantial monthly increases – 8.8 per cent, 5.9 per cent and 5.9 per cent respectively. "Canberra’s large monthly increase may well signify a downturn for that market as federal budget spending is cut," the company said.

Year on year, the increase in stock levels has been slightly more extensive, with a national increase of three per cent. Hobart experienced the highest rise in listings of the capital cities with a 24.1 per cent increase. In stark contrast, Darwin has taken a plunge since the same month last year, recording a - 23.3 per cent decrease in stock levels since August 2011.

“Increasingly the market is segmented,” said Louis Christopher, managing director of SQM Research. “It is becoming difficult to discuss just one national housing market and in my opinion, that will be to base line story for the remainder of 2012.”

Simon Parker

New data showing an improvement in housing affordability during the June quarter comes as property stock levels begin to rise across most capital cities.

As per the Adelaide Bank/Real Estate Institute of Australia (REIA) Housing Affordability Report, the average monthly loan repayment is now $2,155 compared to $2,290 in the June Quarter 2011.  

In addition, median weekly family income is now $1,560, compared to $1,493 in the June Quarter 2011.

Speaking about the report, REIA president Pamela Bennett said: “The June quarter 2012 recorded an improvement in housing affordability with the proportion of income required to meet loan repayments decreasing 0.8 percentage points to 31.9 per cent.”

“Largely due to a higher average income, the Australian Capital Territory remained by far the most affordable state or territory in which to buy a home, with the proportion of income required to meet loan repayments at 17.2 per cent. 

“New South Wales remained the least affordable state or territory in which to buy a home with the proportion of income required to meet loan repayments decreasing to 37.4 per cent.”

“Compared to the 2011 June quarter, all states and territories recorded improvements in housing affordability. The largest decreases in the proportion of income required to meet loan repayments were evident in Tasmania and Victoria, down 4.7 and 4.3 percentage points respectively.”

Adelaide Bank’s general manager Damien Percy said the figures indicate that many people are now deciding to get on with their lives and are again making decisions about their housing choices.

“I think simple timing is a factor,” he said. “Age waits for no-one. Older people in bigger houses make lifestyle choices to ‘downsize’, younger people have growing families and need to upsize.  The imperative to ‘right-size’ your dwelling at a particular life stage can drive decision-making to an extent,” he said.

“Many people have been delaying these important choices and housing decisions for nearly five years.  

“In June 2011, 35.4 per cent of family income was required to meet home loan repayments. In the June Quarter 2012, the figure had come down to 31.9 per cent – a 3.5 percentage point drop.

“This is still a significant chunk of family income, but moving nonetheless to relieve some of the pressure on household budgets. Appropriate and affordable housing underpins stable and successful communities and we forget this at our peril.”

The report also revealed that the number of loans to first home buyers increased in all states and territories with the exception of New South Wales and the Northern Territory.

Victoria was the standout, recording the largest increase in the number of first home buyers for the quarter, up by 23.5 per cent. Victoria also recorded the largest increase in the total number of loans, up by 16.0 per cent. 

The report comes at the same time figures from property research house SQM Research reveal that the level of residential stock around the nation rose slightly during the month of August 2012, increasing by 1.5 per cent and coming to a total of 373,510.

SQM Research reported that Canberra, Sydney and Melbourne all recorded substantial monthly increases – 8.8 per cent, 5.9 per cent and 5.9 per cent respectively. "Canberra’s large monthly increase may well signify a downturn for that market as federal budget spending is cut," the company said.

Year on year, the increase in stock levels has been slightly more extensive, with a national increase of three per cent. Hobart experienced the highest rise in listings of the capital cities with a 24.1 per cent increase. In stark contrast, Darwin has taken a plunge since the same month last year, recording a - 23.3 per cent decrease in stock levels since August 2011.

“Increasingly the market is segmented,” said Louis Christopher, managing director of SQM Research. “It is becoming difficult to discuss just one national housing market and in my opinion, that will be to base line story for the remainder of 2012.”

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