‘Historical low’ for housing affordability

Housing affordability in Australia reached a historic low during the September quarter of 2024, marking the most challenging conditions since the Real Estate Institute of Australia (REIA) began monitoring in 1996.

According to the REIA’s latest Housing Affordability Report (HAR), the proportion of median family income required for average loan repayments climbed to 48.6 per cent, marking an increase of 0.4 percentage points from the previous quarter.

REIA’s president, Leanne Pilkington, said that while there was a modest improvement in Tasmania and the Northern Territory, declines were observed across all other states and territories.

The ACT saw the steepest drop, with affordability falling by 1.4 percentage points.

“The figures underscore the persistent challenges faced by families striving to enter the housing market or manage their existing commitments.

“Rising mortgage sizes coupled with stagnant variable interest rates continue to push affordability further out of reach,” Pilkington said.

Rental affordability also declined during the same period, with the proportion of income required to cover median rents increasing to 24.9 per cent.

While Victoria and Queensland recorded marginal improvements, NSW experienced the most significant decline, with affordability dropping by 1.0 percentage point.

The report also highlighted mixed conditions for first home buyers. The number of new loan commitments fell by 3.9 per cent compared to the previous quarter but remained 9.4 per cent higher year-on-year.

However, the average loan size for first home buyers increased to $536,561, representing a 0.8 per cent rise over the quarter and a notable 6.7 per cent jump over the past 12 months.

Queensland recorded the highest increase in average loan size at 3.0 per cent, while decreases were noted in NSW, Tasmania, and the ACT.

Despite the Reserve Bank of Australia (RBA) maintaining the cash rate at 4.35 per cent and a stable quarterly average standard variable interest rate of 8.8 per cent, the affordability crisis persists.

The quarterly average three-year fixed interest rate saw a slight decrease of 0.5 percentage points to 6.3 per cent, but this has done little to alleviate the mounting pressures on borrowers.

Pilkington emphasised the broader implications of these trends: “The data reveals the need for targeted policy interventions to address housing supply and affordability issues.

“Without meaningful action, home ownership will remain an increasingly elusive goal for many Australians.”

[RELATED: Median income needed to service a new mortgage rises to 50.6%]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.