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Housing affordability improves modestly

Housing affordability improves modestly

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Stacey Moseley

Housing affordability across Australia has experienced a modest improvement, according to new data.

The Real Estate Institute of Australia’s (REIA) December quarter Deposit Power Housing Affordability Report has shown housing affordability improved for the third quarter this year with the proportion of income required to meet loan repayments decreasing 0.7 percentage points to 32.9 per cent over the December quarter. Of the three improvements recorded over the year, the December quarter was the smallest

“As expected, a modest improvement in housing affordability was recorded over the December quarter,” REIA President, Pamela Bennett said.

“The increase of 1.1 per cent in the median weekly income and the decrease of 0.9 per cent in average monthly loan repayments explain the 0.7 percentage point decline in the proportion of family income required to meet loan repayments over the quarter.”

Victoria, Queensland, Western Australia, and Tasmania contributed to the improvement. The largest decline in the proportion of income required to meet loan repayments was recorded in Victoria, down 2.5 percentage points.

New South Wales, South Australia, the Northern Territory and the Australian Capital Territory recorded increases in the proportion of income required to meet loan repayments. New South Wales and the Northern Territory recorded the largest increases over the quarter, both up 0.8 percentage points.

“For the majority of 2011 house prices throughout Australia decreased and with all the current global uncertainty, people will be wary of making new purchases and investments,” Deposit Power Manager, Keith Levy said.

“If the economy remains strong and unemployment remains lower, we are likely to see activity in to upgrader or downgrader segment of the market, as buyers look to take advantage of the softer prices.”

New South Wales remained the least affordable state or territory in which to buy a home. The proportion of income required to meet loan repayments increased 0.8 percentage points over the quarter to 37.9 per cent; 5.0 percentage points higher than the national average. The decline in housing affordability was caused by decreasing income and increasing loan repayments.

REIA’s Deposit Power Housing Affordability Report is based on data from all major lending institutions.

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Housing affordability improves modestly
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