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Housing affordability improves as first home buyers occupy 24.5% of the market


Young couple buying a home

First home buyers have surged to a 5-year high, increasing by 57.7% in NSW.

Housing affordability has improved in every Australian state and territory, according to the latest edition of the Adelaide Bank/REIA Housing Affordability Report.

In numerical terms, the report found that it takes 30.3% of the median family income to cover repayments on the average Australian home loan. This is a 1.2% decrease.

Perhaps the more noteworthy statistic in the report is the surge in first home buyers, who now make up 24.5% of the owner-occupied housing market once refinancers are excluded.

In other words, people buying their first home and living in it now represent just shy of a quarter of residential home buyers.

This is significant, according to REIA President Malcolm Gunning, because "This is the highest rate [of first home buyers] since September 2013 after dropping steadily over the past 5 years".

This trend suggests that first home buyer concessions introduced in Victoria and NSW in July are having an effect.

CoreLogic data shows the increase in first home buyers starting around August, but back then those buyers only made up 17.2% of the owner-occupied market. Investor lending, meanwhile, has seen a significant drop over the same period.

Affordability and first home buyer numbers by state

Here are the report's numbers broken down by state:

State/TerritoryPercentage of first home buyers (share of state's market)Affordability*
NSW19.0%36.1% (down 1.9%)
VIC26.2%32.2% (down 1.2%)
QLD26.1%26.8% (down 0.5%)
SA19.2%25.3% (down 1.5%)
WA36.2%22.4% (down 1.2%)
TAS17.5%23.3% (down 0.6%)
ACT26.8%18.5% (down 1.3%)
NT28.8%19.4% (down 0.9%)

*Affordability is here defined as the proportion of median family income required to meet the average loan repayment.

Interestingly, while first home buyers in NSW have increased by a staggering 57.7%, they still make up just 19% of the owner-occupied market, a lower proportion than every state except Tasmania.

This data is a good sign for first home buyers looking to enter the market, although it's not great news for investors.

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