For the first time in a decade, first home buyers are dominating the Australian property market.
According to the latest Housing Affordability Report (HAR) from the Real Estate Institute of Australia, there has been a 10-year high for first home ownership figures that has coincided with an overall improvement in housing affordability across the country.
REIA president Adrian Kelly said that a combination of factors meant that housing affordability has benefited those who entered the market during the September 2020 quarter.
In fact, market entry has experienced its largest year-on-year increase since 2009 and largest quarterly increase since 2010, with a September quarter rise of 36.1 per cent.
First home buyers now make up 40.8 per cent of the owner-occupied dwelling market.
“This is particularly good news given the large challenges faced by tenants at the outset of the COVID-19 pandemic,” Mr Kelly said.
Further, the report noted that the average loan size to first home buyers decreased to $406,223, a decrease of 5.4 per cent over the quarter but an increase of 0.8 of a percentage point over the past 12 months.
Ultimately, Mr Kelly believes that these results are reflective of how first home buyers are responding to the stable market and historically low interest rates.
The report showed that Australian families experienced a small income increase of 0.5 of a percentage point, while the average loan repayment decreased by 2.5 per cent.
For home owners, affordability improved, with income to loan repayments decreasing 1.1 percentage points to 33.9 per cent over the quarter.
Meanwhile, for renters, affordability declined in the September quarter and over the past year, with the proportion of income required to meet rent payments increasing by 0.4 of a percentage point to 23.7 per cent. This is mainly attributed to the increase in rents in a number of capital cities.
Moving forward, Mr Kelly said that banks could do more to further improve affordability by passing on full interest cuts and helping even more Australians buy homes.