But the west coast bucks the trend
Housing affordability is at an all-time low across Australia, with more effort needed to encourage investors into the market, says a leading property expert.
Leanne Pilkington (pictured above), president of the Real Estate Institute of Australia (REIA) said her organisation’s latest Housing Affordability Report highlighted a concerning trend, indicating a record low in rental affordability across the country, with the exception of the Northern Territory.
According to the REIA report, the proportion of income required to meet the average loan repayment increased to 45.5%, a marginal increase of 0.1 percentage points.
“As of September, an increasing number of investors had been exiting the market due to the persistent challenges posed by the rising cost of living and interest rates,” Pilkington said.
“Interestingly, the ABS Lending Statistics recently reported a return of both investment and first home buyer loans which could be attributed to increased housing prices but also lack of rental opportunities.”
Investors need to return to market, says REIA
Despite some recent increased activity in the loan sector, Pilkington said there had not been a strong return of investors, with the exception of Western Australia.
“More needs to be done to alleviate this trend which in turn, will assist in easing housing affordability,” said Pilkington. “Investors are abandoning the east coast and this is reflected in the current rental crisis.”
First home buyers’ renewed interest
However, Pilkington said first home buyers were returning to the market.
“Soaring rental prices, up by as much as 22.2% over the year, have enticed them back into the market as the fear of missing out (FOMO) and total lack of rental options become more pronounced,” Pilkington said.
According to Pilkington, who took over as president of REIA after Hayden Groves stepped down last year, the issue of a lack of housing affordability is ongoing.
“While the Reserve Bank of Australia has signaled a moderation in cash rate increases, instilling confidence in the market, a sustainable improvement in housing affordability remains contingent on addressing the underlying issue of housing supply,” Pilkington said.
“Until this is tackled, we anticipate that the challenges in affordability will persist.”
Owner occupied home loans down
The REIA report revealed that housing affordability declined in NSW, Queensland and South Australia, remained stable in the Australian Capital Territory, but improved in Victoria, Western Australia, Tasmania and the Northern Territory.
The report showed that the total number of owner occupied dwelling loans decreased to 74,855, a fall of 4.1% over the September quarter and a decrease of 12.1% over the past year.
The total number of loans for owner occupied dwellings decreased in all states and territories over the September quarter. Decreases ranged from 0.8% in Victoria to 15.4% in the ACT.
Over the September quarter, the average loan size increased to $592,140, an increase of 1.5% over the September quarter but a decrease of 0.6% over the past 12 months.
At the end of last year the REIA submitted a proposal to the Department of Social Services, advocating for a National Plan for Housing and Homelessness in an effort to address the pressing housing issues currently facing Australia,
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