Affordability at ‘new lows’: REIA

The latest Housing Affordability Report released by the Real Estate Institute of Australia (REIA) has found that housing affordability has declined over the September quarter of 2023, with the proportion of income required to meet the average loan repayment increasing to 45.5 per cent.

REIA president Leanne Pilkington said these results have come during a time when cost of living is front of minds for Australians.

“… central to that is the cost of holding a mortgage on your home and the rising costs of a previously very affordable rental market,” Ms Pilkington said.

“It was these two things that characterised the September quarter. Nationally, the outlook for Australians serving a home loan continued to be challenging with the cash rate now at 4.35 per cent.”

On a state level, affordability has declined in NSW, Queensland, and South Australia, however, has remained stable in the ACT.

Victoria, Western Australia, Tasmania and the Northern Territory, on the other hand, have seen improvements in affordability, particularly in the NT where the proportion of income needed to service a loan declined by 1.1 percentage points, while in South Australia, it increased by 0.7 percentage points.

Furthermore, the report found that the number of first home buyers has decreased by 5.4 per cent prospective home buyers are now required to dedicate 46.2 per cent as of September 2023 (up from 40.3 per cent during the same period last year) of their income to service a new loan on the average dwelling.

This revealed an increase from the low of 29 per cent during March 2020, when the official cash rate sat at 0.1 per cent in response to the pandemic, however, despite this deterioration in mortgage serviceability, the portion of income required to service a new loan still sits slightly below the series high of 47.3 per cent recorded during March 2008.

[RELATED: Mortgage serviceability continues to deteriorate: ANZ/CoreLogic]