Homeowners fared better during the first quarter of the year than renters, as housing affordability improved across all states except the Northern Territory, according to a study by the Real Estate Institute of Australia (REIA).
Of the states, Victoria and New South Wales recorded the most significant boost in housing affordability in the first quarter of the year compared to the same period last year, with the proportion of income required to meet home-loan repayments decreasing by 1.6 percentage points to 32.5% and 1.1 percentage points to 35.4%, respectively.
While rental affordability also improved in New South Wales and Victoria, the study found that some states recorded significant increases in the proportion of income needed to settle rents, leading to an overall deterioration in rental affordability in Australia.
"While rental affordability improved marginally in the larger states of New South Wales, Victoria, and Queensland as well as in Western Australia and the Northern Territory, a large decline in rental affordability in South Australia and Tasmania offset this improvement resulting in an overall decline in rental affordability nationally," REIA president Adrian Kelly said.
Also Read: Why supply and demand are the ultimate indicators of housing affordability
The table below shows the proportion of income needed to meet home-loan repayments and rents in each state. Take note that the numbers enclosed in parentheses are the percentage-point changes over the year.
STATE |
Share of income needed to pay: |
|
Mortgage repayments |
Rents |
|
|
New South Wales |
35.4% (-1.1) |
28.2% (-1.9) |
|
Victoria |
32.5% (-1.6) |
23.1% (-0.7) |
|
Queensland |
27.5% (n/a) |
22.0% (-1.1%) |
|
South Australia |
26.9% (-0.3) |
22.8% (+0.4) |
|
Western Australia |
22.6% (-1.0) |
16.5% (+0.2) |
|
Tasmania |
25.4% (+0.9) |
29.3% (+1.2) |
|
Northern Territory |
20.2% (+0.4) |
20.9% (-1.6%) |
|
Australian Capital Territory |
20.3% (-0.3) |
19.0% (+0.5) |
First-home buyer participation
While housing affordability showed improvement, the number of loans — excluding refinancing — declined by 20% over the March quarter.
"This is not unusual for the first quarter of the calendar year, however, compared with the same quarter of 2018, the number of new loans declined by 13.7%," Kelly said.
There was also a considerable decline in the number of Australians entering the home-loan market.
Also Read: How mortgage brokers help first–home buyers
For instance, the number of loans issued to first-home buyers in New South Wales decreased by 24.2% over the quarter and 11% compared to last year. In Victoria, the home-loan demand from first-home buyers also weakened — down by 18.7% over the quarter and 11.9% in the year.
The biggest slump was recorded in the Australian Capital Territory. The number of loans issued for first-home buyers in the state declined by 43% from the same period last year.
The table below shows the decline in the number of loans issued to first-home buyers in each state:
STATE |
Number of loans issued to first-home buyers Q1 2019 |
% Decline compared to Q1 2018 |
|
New South Wales |
5,790 |
11.0% |
|
Victoria |
7,199 |
11.9% |
|
Queensland |
4,677 |
17.1% |
|
South Australia |
1,370 |
5.6% |
|
Western Australia |
3,313 |
7.4% |
|
Tasmania |
475 |
13.1% |
|
Northern Territory |
187 |
12.1% |
|
Australian Capital Territory |
392 |
43% |
Collections: Mortgage News
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