The June quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows an improvement in housing affordability nationally, with the greatest improvement in South Australia.

Nationally, the proportion of income required to meet loan repayments decreased by 0.5 percentage points to 30.3%, which was a decrease of 0.6 percentage points on the 2014 figure.

"South Australia showed the greatest improvement in affordability across the country with the proportion of income required to meet loan repayments going down 2.9 percentage points, to 25.5%," said Damian Percy, General Manager of Adelaide Bank. "South Australia was also the only state to record a decrease in the average loan size to first home buyers, with all other States and Territories recording increases." 

In terms of the proportion of family income required to meet loan repayments, South Australia now has the narrowest gap between buying and renting of all the mainland states with just a 2.1% difference. "With the exception of Tasmania and the Northern Territory, all States and Territories recorded increases in the number of loans to first home buyers over the June Quarter," said Percy.

The Australian Capital Territory saw the biggest increase going up by 20.9%. The ACT still remains the most affordable amongst the States and Territories in which to buy or rent a home.

New South Wales remained the least affordable state, with the biggest increase in the average loan size year on year. The Northern Territory recorded the biggest annual improvement in housing affordability, with the proportion of income required to meet loan repayments decreasing 2.8 percentage points.

"The improvement in housing affordability is attributable to the rise in the national median weekly family income and a drop in interest rates," said Percy. "The national median weekly family income increased by 0.4% to $1,622 during the June quarter of 2015. This represents a 2.4% increase when compared to the same quarter of 2014. The cut in official interest rates during the second quarter of 2015, resulted in an average monthly loan repayment of $2,128 – a drop of 1.4% over the quarter but an increase of 0.4% when compared to the corresponding quarter of the previous year."