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HomeEducationFirst home buyers hit hardest by worsening affordability

First home buyers hit hardest by worsening affordability


By Staff Reporter

Housing affordability declined over the September quarter of 2021, with the proportion of income required to meet loan repayments increasing to 36.2 per cent nationally, the latest Real Estate Institute of Australia (REIA) Housing Affordability Report has found.

REIA President Adrian Kelly said housing affordability shows a worsening situation, particularly for first home buyers.

“While housing affordability declined across many states over the September quarter it has improved in Western Australia and the Australian Capital Territory,” Mr Kelly said.

“The Northern Territory remained stable and is still the most affordable state or territory to meet home loan repayments.”

The number of first home buyers decreased about one per cent over the past year to represent about 35 per cent of owner occupier dwelling commitments, according to the report.

Mr Kelly said those hardest hits by the rising market were first home buyers, which shows the need for successful government programs like the First Home Loan Deposit Scheme and the First Home Super Saver Program to be supported and expanded.

“As we attempt to start adjusting to the new COVID normal, buyer and investor interest shows little signs of being satiated,” he said.

“This competition means the average loan size to first home buyers has increased to $459,256. This was an increase of two per cent over the quarter and an increase of 14 per cent over the past 12 months.”

While nationally the average loan size increased for first home buyers by 14 per cent over the year, these increases impacted differently throughout the nation with Tasmania rising by 21.3 per cent and the Northern Territory rising by just 5.8 per cent.

Mr Kelly added that it was pleasing that rental affordability had largely remained stable in the September quarter of 2021.

“Nationally there was a marginal increase of 0.2 percentage points over the quarter and an increase of 0.4 percentage points over the past 12 months,” he said.

“Over the quarter, rental affordability improved in Victoria and Tasmania, remained stable in the Australian Capital Territory, but declined in all other states and territories.

“The least affordable state or territory in which to rent a property was Tasmania, where the proportion of income required to meet median rent was 29.7 per cent. This was 6.8 percentage points higher than the national average.

“Victoria became the most affordable, where the proportion of income required to meet median rent was 19.7 per cent.”

Mr Kelly said the complexity of housing affordability requires bipartisan support, commitment, and leadership from both State and Federal Governments to ensure the right balance of regulation, supply, and policy levers.

The REIA Housing Affordability Report over the past 20 years showed that housing affordability peaked around 20 years ago with the proportion of family income devoted to meeting the average loan repayment at 27.2 per cent.


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