Lower loan sizes and moderate increases in income have been good news for Australia’s housing affordability.
According to the latest Housing Affordability Report by Adelaide Bank and The Real Estate Institute of Australia, the proportion of income required to meet average home loan repayments fell by 2.4 percentage points to 30.0 per cent for the March 2016 quarter.
The report showed that all states and territories saw improvements in housing affordability during the quarter except the Northern Territory, which experienced a 0.7 percentage point increase to 21.9 per cent in the amount of family income needed to meet mortgage repayments.
New South Wales saw the greatest improvement in housing affordability, with the proportion of income needed to meet loan repayments falling 4.0 percentage points to 35.4 per cent.
Victoria experienced a drop of 1.9 percentage points to 32.7 per cent, while Queensland witnessed a decline of 1.5 points to 26.1 per cent, and South Australia saw a 1.2 per cent decrease to 25.9 per cent.
The proportion of income required to meet loan repayments fell by 0.8 percentage points to 23.2 per cent in Western Australia and by 0.7 points to 23.0 per cent in Tasmania.
The ACT remains the most affordable, with the income amount needed to meet loan repayments down 0.6 percentage points to 19.3 per cent.
Meanwhile, the total number of loans (excluding refinancing) dropped by 14.5 per cent over the quarter to 99,663, while the average loan size for first home buyers decreased by 6.0 per cent to $368,863.
[Related: Mortgage arrears continue upward trend]