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Hayden Groves warns ‘affordability could worsen’

By Grace Ormsby
09 March 2022 | 10 minute read
Hayden Groves reb

The Real Estate Industry of Australia (REIA) has signalled another alarm on the state of housing affordability across the nation.

The proportion of income required to meet loan repayments has now reached 37 per cent, as at December 2021, the institute has flagged in its latest Housing Affordability Report.

In Western Australia, a 0.1 percentage point decrease in housing affordability has been reported – while NSW has seen a 5.9 per cent decline in its own affordability.  

The findings show affordability is now a key issue for Australians across the home ownership and rental spectrum, according to REIA president Hayden Groves, who has raised concern that “affordability could worsen” with interest rate rises looming.

Affordability already appears to be biting at first home buyers, who made up just 37,620 transactions over the quarter – a fall of 0.4 per cent.

First home buyers now make up 34.1 per cent of owner-occupier dwelling commitments, a decrease of 7.8 percentage points over the year, Mr Groves flagged.

Even though this market segment made up a smaller component of sales, it appears they have to spend more to get on the property ladder. The president did note that “the average loan size to first home buyers increased to $470,548” as at December 2021.

A 2.5 per cent increase over the quarter, it brought the average loan size for first home buyers up by 12.9 per cent over the 12-month period, with this increase seen across all states and territories – except Tasmania.

Elsewhere, “the total number of owner-occupied dwelling loans increased to 110,230 an increase of 2.2 per cent over the December quarter, and a marginal increase of 0.3 per cent over the past 12 months,” Mr Groves said.

The total number of loans for owner-occupied dwellings increased in Victoria (4.1 per cent), Queensland (1.2 per cent), South Australia (5.1 per cent), Western Australia (2.7 per cent) and Tasmania (5 per cent) but decreased in NSW (0.1 per cent), Northern Territory (5.5 per cent) and the ACT (3.7 per cent).

Owner-occupiers also copped increases to average loan sizes, which now sits at $590,482.

According to Mr Groves, it’s an “increase of 3.5 per cent over the quarter and an increase of 17.7 per cent over the past 12 months” and is the largest annual increase since the REIA series began in 2002.

The Northern Territory buyers saw the largest change in their average loan size – reporting an increase of 7.9 per cent over the December quarter.

Zooming out across the entire 12 months of 2021, it was Victoria that recorded the highest annual increase, which Mr Groves pinned at 22.6 per cent.

Rental woes

While home loan values continue to surge, so too do the costs associated with rentals.

The REIA president has also acknowledged that the proportion of income required to meet median rent increased to 23 per cent as at December’s end, a 0.1 per cent change over the quarter and a 0.3 per cent change over the year.

With costs rising across the board, Mr Groves and the REIA are urging governments across Australia “to get on the front foot with this issue”.

He’s asking for prioritisation of housing supply shortages, considering this to be “the most effective way of getting affordability under control”.


Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.

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