Housing affordability at ‘crisis point’: REIA

The Real Estate Institute of Australia’s (REIA) Housing Affordability Report for the December 2023 quarter has revealed housing affordability for mortgagees reached a “crisis point” towards the end of the year.

According to the report, housing affordability fell 2.7 percentage points over the quarter, with the average household spending 47.7 per cent of their income on mortgage repayments.

President of the REIA, Leanne Pilkington, said these results came as “no surprise” with the official cash rate sitting at 4.35 per cent, stating that housing affordability for mortgagees is “the worst on record” since the report was first published.

“Housing affordability in New South Wales, Victoria, South Australia, Tasmania, and the Australian Capital Territory (ACT) is at its lowest point in 20 years,” Pilkington said.

“Queensland emerged as the biggest loser in the affordability stakes declining in housing affordability by 2.8 per cent in the quarter.

“Only with rate rise relief will we see changes to this outlook.”

According to the report, all jurisdictions reported increases in first home buyer volumes, however, this “varied considerably”.

Average loan sizes increase for FHB

The overall loan size to first home buyers increased by 2.3 per cent over the quarter to $514,664 and represented an increase of 5.5 per cent over the past 12 months.

All states and territories recorded increases in loan sizes for first home buyers with the exception of Tasmania, which recorded a decrease of 6.9 per cent.

Meanwhile, South Australia recorded the largest increase in average first home buyer loans at 6.6 per cent and NSW and the Northern Territory recorded the smallest increase at 0.3 per cent.

“The number of first home buyers increased to 31,445, an increase of 16.8 per cent over the quarter and an increase of 12.8 per cent compared to the December quarter 2022,” Pilkington added.

Owner-occupier dwelling loans up

The report also revealed an increase in the total number of owner-occupier dwelling loans, which rose by 11.7 per cent over the December quarter, and 2.8 per cent annually to 83,620.

This was the case for all states and territories during the quarter, with increases ranging from 9.7 per cent in Queensland to 25.2 per cent in the NT.

The average loan size for owner-occupier dwellings increased to $614,029, representing an increase of 3.7 per cent over the December quarter, and an increase of 2.3 per cent over the 12 months.

REIA calls on government for cost-of-living relief

This report came as the REIA made an “urgent call” to the federal government to implement cost-of-living relief measures for Australian home owners in the upcoming budget 2024–25.

The REIA’s Budget Submission 2024 homed in on addressing the concerns surrounding cost-of-living pressures in regard to housing.

Pilkington stated that there must be a practical approach to empty houses, proposing an “immediate occupancy audit” and that “tinkering around the edges of income tax” would not do much for housing supply or economic productivity.

[RELATED: Mortgage values drop in back-to-back months: ABS]

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.