Housing affordability in Australia declines to record low

According to the Real Estate Institute of Australia (REIA) latest Housing Affordability Report, the average loan repayment now represents 48.1 per cent of the median family income, marking a 1.3 percentage point increase from the previous quarter.

“The report highlights the impact interest rate increases and rising inflation have had on Australians in regards to both rent and home ownership,” said REIA president Leanne Pilkington.

While Victoria experienced a slight improvement, with minor gains also seen in the Northern Territory and the ACT, affordability worsened across the remaining states.

“Declines ranged from 1.0 percentage points in Tasmania to 1.8 percentage points in South Australia. Rental affordability also declined over the quarter,” Pilkington said.

Nationally, the proportion of income needed to cover median rents rose by 0.2 percentage points to 24.6 per cent.

“Across the states and territories, movement has been mixed: rental affordability improved over the quarter in New South Wales, Tasmania, and the Australian Capital Territory, and declined in all other states and territories,” Pilkington said.

“Declines ranged from 0.2 percentage points in South Australia and the Northern Territory to 0.6 percentage points in Victoria.”

On a positive note, the number of first home buyers increased to 30,636, an 18.6 per cent rise from the previous quarter and 7.2 per cent higher than in the June quarter of 2023.

“First home buyers now make up 36.6 per cent of owner-occupier dwelling commitments, a decrease of 0.1 percentage points over the quarter but an increase of 0.1 percentage points over the year,” Pilkington said.

The Reserve Bank of Australia (RBA) kept the official cash rate at 4.35 per cent throughout the June quarter. The average standard variable interest rate remained stable at 8.8 per cent, while the average three-year fixed rate also held steady at 6.8 per cent.

Over the quarter, the number of first home buyers rose in all states and territories. The smallest increase was observed in South Australia (9.2 per cent) and the largest in the NT (39.3 per cent), although the NT remains the smallest market with only 290 loans to first home buyers.

“The average loan size to first home buyers increased to $532,429, a rise of 2.7 per cent over the quarter and 6.8 per cent over the past 12 months,” Pilkington said.

“The average loan size to first home buyers decreased in the Northern Territory and the Australian Capital Territory and increased in all six states. South Australia saw the largest increase in average loan size (4.9 per cent) and Victoria the smallest (0.6 per cent).”

The total number of owner-occupied dwelling loans rose to 83,599, reflecting an 18.8 per cent increase over the June quarter and 6.9 per cent over the past year.

The number of loans for owner-occupiers grew in all states and territories during the June quarter, with increases ranging from 9.8 per cent in South Australia to 25.9 per cent in NSW.

“The average loan size increased to $629,249, an increase of 3.6 per cent over the June quarter and 7.9 per cent over the past 12 months,” she said.

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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.