Housing affordability falls
In spite of the decline, first home buyers are returning to the market.
The Adelaide Bank/REIA Housing Affordability Report has found the proportion of median family income needed to meet average home loan repayments hit 31.6% in the final quarter of 2017, up 1.3% from the previous quarter. Housing affordability fell across all states and territories.
"At the same time, the number of loans increased across the country by 1.5%, with increases in each state and territory except New South Wales and Western Australia," REIA president Malcolm Gunning said.
While affordability may be down, it hasn't deterred first home buyers from returning to the market.
"First home buyers now make up 25.8% of the total owner-occupied housing market, excluding refinancing. This is the highest rate since December 2012 after dropping steadily over the past five years," Gunning said.
There was mixed news for renters, with rental affordability improving in New South Wales and Western Australia, but declining in Melbourne, Adelaide, Hobart, Darwin and Canberra.
Gunning said affordability would be improved by adding property supply, citing a Grattan Institute study that claimed the industry needed to build an extra 50,000 homes a year for the next decade. He said an aligned approach from all three levels of government was vital.
"REIA believes the first step in this is the appointment of a Minister of Property Services. This would also recognise the importance of the property sector as a driver of economic growth and employment. Property investment supported by historically low interest rates has been a significant contributor to growth in the Australian economy since 2013/14 as we transition away from a decade-long reliance on mining," Gunning said.