Low rates fail to ease housing affordability
The median family income required to service a home loan has crept up in spite of record-low interest rates.
The Real Estate Institute of Australia (REIA) has reported that the proportion of median family income required to meet average monthly loan repayments increased slightly from 29.4% to 29.5% over the September quarter. REIA president Neville Sanders said low rates had failed to ease housing affordability pressures.
“The latest Adelaide Bank/REIA Housing Affordability Report shows that whilst the proportion of the median family income required to meet average monthly loan repayments increased by 0.1 percentage points, it is still at the lower end over the last seven years. Unfortunately, historically low interest rates were unable to offset the increasing size of mortgages resulting in the rise in the proportion of the median family income required to meet average monthly loan repayments,” Sanders said.
While affordability improved in Victoria, South Australia, the Northern Territory and the ACT, Sanders said New South Wales remained the least affordable state. Tasmania saw the smallest average loan size, while first homebuyers were most active in Western Australia.
Sanders said that while homeowners were hit with an increase in the proportion of income needed to service a home loan, there was good news for renters.
“The proportion of the median family income required to meet median rents decreased by 0.6 percentage points to 24.2% during the quarter and South Australia was the only jurisdiction where rental affordability worsened.”