Home loan repayments become easier as housing affordability increases

5.9.13Following the cash rate decision earlier this week, the Real Estate Institute of Australia (REIA) and the Adelaide Bank have released their latest Housing Affordability report, which has highlighted that purchasing property has been becoming increasingly possible for Australians across the nation.

Over the last two years, the proportion of income needed to make home loan repayments has fallen to 28.7 per cent, which is the lowest level in a decade.

The president of the REIA Peter Bushby said that with the exception of the Northern Territory, each and every state and territory experienced improvements in housing affordability and a reduction in the amount of income required to meet repayments.

Queensland recorded the best reduction in income proportion, falling by 1.9 percentage points to rest at 26 per cent.

“Affordability is improved in all states and territories when compared to the same time last year and no doubt, the seven interest rate cuts since November 2011 have played a role,” said Mr Bushby in a September 4 statement.

“The variable interest rate declined 0.2 percentage points, from 6.1 per cent to 5.9 per cent in the June quarter, which is a decrease of 0.7 percentage points compared to the same time last year and the three year fixed rate fell by 0.3 percentage points over the quarter and 0.9 percentage points compared to the June quarter 2012, to 5.1 per cent.”

Mr Bushby went on to say that Victoria had experienced the largest number of first home buyer loan commitments for the previous quarter, while Western Australia hosted the most for the entire year.

“More is required to entice first home buyers back though, through stamp duty reforms, access to superannuation and first home buyers’ assistance,” said Mr Bushby.

“They made up just 14.6 per cent of the owner-occupier market, a persistently low number compared to the long-run average proportion of 20 per cent.”

Leave a Reply

Your email address will not be published. Required fields are marked *