The Adelaide Bank / REIA Housing Affordability Report shows that housing affordability in Australia declined during the September quarter. But on the bright side, rental affordability improved.

Five out of eight states and territories recorded a decline in affordability.

REIA President Neville Sanders said, "The latest REIA Housing Affordability Report shows that the proportion of median family income required to meet average loan repayments was 31.7%. The figure increased 1.4 percentage points during the quarter, and 1.3 percentage points compared to a year ago, largely due to the increasing size of new loans."

Perhaps not surprisingly, New South Wales and Victoria were the least affordable states. In New South Wales, housing affordability declined 2.4 percentage points, with 38% of the median family income required to cover average monthly loan repayments. In Victoria, housing affordability declined 1.9 percentage points, with 34% of family income required to meet loan repayments.

The ACT was the most affordable state. Housing affordability improved by 0.2 percentage points during the quarter, with a comparatively modest 19.3% of family income required to cover monthly loan repayments. 

Rental affordability improved across all states, reflecting the increase in housing supply.

The ACT was the most affordable state for renters, with only 16.8% of median family income required to meet average rent payments.

New South Wales and the Northern Territory were the most expensive states for renters. In NSW, 28.1% of average family income is required to meet average rents. And in the Northern Territory, 27.9% of family income goes to rent.