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Affordability, better yields helping property market

Affordability, better yields helping property market

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Staff Reporter

While parts of the Australian economy remain subdued, there is seemingly some light at the end of the tunnel.

According to a recent PRDnationwide Quarterly Economic and Property Report, gross spending on housing finance was $20.3 billion during the month of February - a $1 billion increase on the same time last year.

In addition, home loan affordability - based on the Real Estate Institute of Australia (REIA)/Deposit Power Home Loan Affordability Index - has improved slightly, giving some home hunters a reprieve. 

“On average, Australian households now need approximately 32.9 per cent of the family income to service their home loan,'' PRDnationwide research director Aaron Maskrey said.

In NSW, however, home buyers require 37.9 per cent of their income to service their home loan.

Mr Maskrey went on to say that Australian property conditions are once again luring investors.

Based on ABS data, PRDnationwide said almost 34 per cent of the property market is now investor financed and is expected to increase as rental yields across the nation continue to become more attractive.

“Looking at the macro level property market, the reality is that the rate of decline in values have slowed and could be even stagnant,” Mr Maskrey said.

“Investors could now be tempted back into the property market as the rate of decline in values erodes away, while the equity market remains not only turbulent, but has provided returns inferior to fixed bonds over the past five years."

Yet PRDnationwide added that any significant rise in the unemployment rate would hurt an already fragile property market.

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Affordability, better yields helping property market
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