Proportion of income required to meet mortgage repayments rises
Housing affordability continued to decline over the September quarter, with the proportion of income required to meet the average loan repayment rising 3.8 percentage points to 42.2%, according to the Real Estate Institute of Australia’s latest Housing Affordability Report.
Affordability fell in all states and territories. Tasmania posted the highest decline, with the proportion of income required to meet repayments rising 5.9 percentage points. Western Australia saw the lowest affordability decline, with the proportion of income rising 3.2 percentage points.
“Rental affordability declined less than housing affordability, with the proportion of income required to meet median rent increasing by 0.1 percentage points to 23.0%,” said REIA president Hayden Groves. “Rental affordability improved in New South Wales and the Australian Capital Territory, remained stable in South Australia and Western Australia, but declined in all other states and territories.”
The number of first-home buyers fell to 26.343, a quarterly decrease of 9.6% and a 30.3% drop from the September 2021 quarter. First-home buyers now account for 30.9% of owner-occupier dwelling commitments, a 0.1-percentage-point drop over the quarter and a 4.2-percentage-point drop year on year.
“Over the September quarter, the number of first-home buyers decreased in all states and territories except Tasmania and the Northern Territory, where there was an increase,” Groves said.
The average loan size to first-home buyers was $479,125 over the quarter – a drop of 0.1% from the previous quarter but a 4.4% increase year over year, REIA reported.
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“The total number of owner-occupied dwellings decreased to 85,122, a decrease of 9.4% over the September quarter and a decrease of 21.0% over the past 12 months,” Groves said. “This is the highest annual decrease in new loans since December 2010. The total number of loans for owner-occupied dwellings decreased in all states and territories over the September quarter except in the Northern Territory, where it increased 2.3%. Decreases ranged from 6.6% in Tasmania to 12.2% in the Australian Capital Territory.”
The average loan size fell to $595.566 in the September quarter, a quarterly decrease of 2.7%, but an increase of 4.4% year on year, Groves said. Loan sizes have fallen steadily this year as the Reserve Bank’s repeated rate hikes have slashed prospective home buyers’ borrowing power.
“This is the first quarterly decrease since September 2020,” he said. “Over the quarter, the average loan size decreased in all states and territories except South Australia, Tasmania and the Northern Territory. Decreases ranged from 0.9% in the Australian Capital Territory to 4.4% in New South Wales.”
On an annual basis, however, the average loan size increased in all states and territories, with Tasmania posting the highest annual increase at 13.8%.
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