The Adelaide Bank/REIA Housing Affordability Report shows that housing affordability in Australia declined during the September quarter, with the proportion of the median family income required to meet average monthly loan repayments increasing to 29.5% from 29.4% in the previous quarter.

REIA President Neville Sanders said even though the rate increased marginally, it was still at the low end of rates observed in recent years. 

“The latest Adelaide Bank/REIA Housing Affordability Report shows that whilst the proportion of the median family income required to meet average monthly loan repayments increased by 0.1 percentage points, it is still at the lower end over the last seven years," he said. 

Sanders said that bigger mortgages have eroded the benefits of lower interest rates.

"Unfortunately, historically low interest rates were unable to offset the increasing size of mortgages," he said.

Affordability actually improved in most states, but the gains were offset by declines in affordability in New South Wales.

“Over the September quarter, affordability improved in Victoria, South Australia, the Northern Territory and the Australian Capital Territory. New South Wales remained the least affordable state or territory for home buyers," said Sanders. 

According to the report, Tasmania had the smallest average loan size, while Western Australia has the largest proportion of first home buyers in the owner-occupier market.

Sanders explained that rental affordability had improved.

“The September quarter brought good news for renters," he said. "The proportion of the median family income required to meet median rents decreased by 0.6 percentage points to 24.2% during the quarter."

Sanders said the Australian Bureau of Statistics has revised its housing finance survey to show that fewer first-home buyers were in the owner-occupier market than previously reported.

"It is extremely disappointing that the revised figures show fewer first home buyers since 2012 than previously reported," he said. 

"First home buyer financial commitments are down to 13.1 per cent of total owner-occupied housing in September. This is the lowest figure since the ABS series was commenced in June 1991 and compares to an average of 18.5 per cent over the period."

Sanders said that as long as property prices keep rising, he's concerned that first-home buyers will be even further locked out of the market.

"With the average loan sizes continuing to rise, REIA is concerned that the proportion (of first-home buyers in the market) may fall even further in the coming quarters,” concluded Sanders.

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