Housing affordability continues to improve, encouraging first home buyers back into the market.
According to the latest Adelaide Bank/REIA Housing Affordability Report, the proportion of income required to meet loan repayments dropped 0.1 per cent across Australia to 31.8 per cent.
This is the fifth consecutive month of improvement in housing affordability.
New South Wales was the best performer, with the proportion of income required to meet loan repayments dropping 0.9 percentage points.
Meanwhile, the ACT was the worst performer, with the proportion of income required increasing by 1.7 percentage points.
Adelaide Bank’s general manager Damien Percy said the improvement in housing affordability would no doubt encourage first home buyers into the market.
“The number of first home buyers has continued to rise and rental affordability has also stabilised,” Mr Percy said. “Compared to the September quarter last year, we have now observed a 14.3 per cent increase in new finance commitments to first home buyers, bringing this segment back up to almost 20 per cent of all residential homebuyers.
“This is still quite a long way off the 30.8 per cent level for first home buyers recorded in the June quarter of 2009 but there are several factors that seem to be driving this growth.
“Median weekly family income has also increased from the September quarter in 2011 by around $250 per month.
“The average loan size of new lending commitments is now at $320,542 and average monthly loan repayments are up slightly, to $2,176 or $544 per week.
“The current low interest rate environment is encouraging many people to re-visit and weigh up the ‘buy versus rent’ equation.
“Certainly, there are many desirable parts of Australia where it is now cheaper to buy and make loan repayments than it is to rent, and around a fifth of all homebuyers are first home owners who have decided to come down on the ‘buy’ side of the equation.”