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Australian housing affordability has recorded its sharpest quarterly improvement since 2016, bolstered by falling loan repayments and modest income growth, according to new data from the Real Estate Institute of Australia (REIA).
In its latest Housing Affordability Report, the REIA found that average monthly loan repayments fell by 2.9 per cent to $5,323 in the March quarter, driven by declining interest rates and smaller loan sizes. The share of median family income required to service a home loan also dropped 2 percentage points to 48 per cent, the most significant single-quarter easing in nine years.
Median weekly family income climbed by 1.1 per cent to $2,561 over the quarter, marking a 4 per cent year-on-year increase.
The improvement was Australia-wide, with all states and territories reporting greater affordability except the Northern Territory, which saw a marginal deterioration of 0.5 percentage points. NSW and the ACT led the gains, each recording a 3-point improvement.
Still, NSW remains the least affordable state, with 56.8 per cent of a median family’s income required to meet average mortgage repayments. In contrast, the ACT remains the most affordable at 33.4 per cent.
First home buyers stayed active in the market, though seasonal softness weighed on volumes. There were 26,091 new loan commitments in the March quarter, down 15.9 per cent from the previous three months but up 1 per cent from the same period last year.
These buyers accounted for 35.7 per cent of all owner-occupier loan commitments – steady quarter-on-quarter but 1.1 points lower than a year ago.
Rental affordability also ticked higher for a second consecutive quarter. The share of household income needed to cover median rent fell by 0.2 percentage points to 24.5 per cent.
As with home loan serviceability, the ACT remains the most affordable jurisdiction for renters at 18.9 per cent, while NSW renters continue to face the greatest strain, committing 27.6 per cent of their income on average.
With 2025 starting strong with affordability improvements, REIA said the rest of the year could be “a more navigable path” for both buyers and renters.
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