Victoria leads small national increase in housing affordability: REIA

Victoria recorded the largest improvement in housing affordability in the final quarter of 2011 with smaller improvements recorded in WA, Queensland and Tasmania, according to the latest REIA/Deposit Power Housing Affordability Report. 

Nationally, housing affordability improved by just 0.7 percentage points, with the proportion of income required to meet home loan repayments falling from 33.6% to 32.9%. 

Over the three-month period, the proportion of income required to meet loan repayments in Victoria fell from 35.6% from 33.1%. 

As a result Victoria has dropped from second least affordable housing market to third, swapping places with South Australia, where housing affordability worsened, with the ratio of median income to median mortgage repayment rising from 33.5% to 34.2%.

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Source: REIA

REIA president Pamela Bennett says of the three quarters to record improvements in housing affordability in 2011, the December quarter’s improvement was the smallest.

“The increase of 1.1% in the median weekly income and the decrease of 0.9% in average monthly loan repayments explain the 0.7% decline in the proportion of family income required to meet loan repayments over the quarter,” she says. 

“With the average loan (excluding refinancing) increasing over the quarter by 3.6%, the 0.5% interest rate cut was the reason for the decrease in loan repayments.” 

Housing affordability worsened in NSW (up 0.8% to 37.9%), and it remains the least affordable housing market. 

Housing affordability improved in Queensland (down 1.5 percentage points to 31%), WA (down 1 percentage point to 22.9%) and Tasmania (down 0.9 percentage points to 27.1%). 

The ACT remains the most affordable housing market (up 0.7 percentage points to 18.6%) followed by the Northern Territory (up 0.8 percentage points to 22.4%). 

Nationally, the number of loans to first-home buyers increased by 25.6% to 29,128 over the December quarter and 23.8% over the year, with NSW accounting for more than a third of first-time borrowers (11,194). 

During the quarter, Western Australia was the only state or territory to record an increase in the number of loans, up 1.6%. South Australia recorded the biggest decrease, down 17.8%.

During the December quarter, New South Wales recorded the highest average loan size across the country; this figure currently sits at $344,012. The lowest average loan size was recorded in Tasmania, at $212,584.