Mortgage serviceability pressures easing

The latest findings from Adelaide Bank and the Real Estate Institute of Australia’s (REIA) Housing Affordability Report have revealed that the proportion of income required to meet loan repayments decreased to 31.4 per cent over the September quarter 2018, a decline of 0.8 percentage points. 

When assessed quarter-on-quarter, the research found that housing affordability improved in all states and territories except Queensland, where the proportion of income required to service a mortgage remained stable at 28.1 per cent.

The sharpest improvement in housing affordability was in NSW, where the proportion of income required to meet loan repayments decreased by 1.5 per cent to 36.6 per cent, followed by Western Australia (1.2 per cent drop to 22.7 per cent), the ACT (0.9 per cent drop to 20 per cent), Victoria (0.5 per cent drop to 33.8 per cent), the Northern Territory (0.5 per cent drop to 21 per cent), Tasmania (0.3 per cent drop to 25.1 per cent), and South Australia (0.3 per cent drop to 26.7 per cent).

The report also found that all states and territories reported an annual decline in new loans originated except for Tasmania, where there was a 2.7 per cent increase.

According to the research, the declines ranged from 17.6 per cent in Western Australia to 4.4 per cent in South Australia, with Western Australia reporting both the largest decrease in the number of loans to first home buyers and the highest proportion of first home buyers at 35.1 per cent.  

Further, the Adelaide Bank/REIA report stated that the overall number of first home buyers decreased to 27,839, a fall of 2 per cent quarter-on-quarter during the quarter and 3.7 per cent year-on-year.

The research found that the number of first home buyers increased in Queensland, South Australia, Tasmania and the Northern Territory over the September quarter, with the largest rise in the Northern Territory (14.7 per cent).

When compared to the corresponding quarter 2017, the number of first home buyers increased in New South Wales, South Australia, Tasmania and the Northern Territory, with the largest increase in Tasmania (25.1 per cent).

The report also noted that the weighted average capital city median house price decreased to $751,411, a decline of 1.6 per cent over the quarter and 1.5 per cent year-on-year.

[Related: Drop in home prices sharpest since GFC]