Declining housing affordability highlights the importance of addressing the supply side issue

March 4th,2016

The Real Estate Institute of Australia (REIA) says that in the last quarter of 2015, housing affordability in Australia declined to its worst level in the last three years.

REIA President Neville Sanders says, “The latest Adelaide Bank/REIA Housing Affordability Report shows that the proportion of median family income required to meet average loan repayments was 32.4%, which is the worst level since the December quarter of 2012. Marginally lower interest rates did not curb the deterioration in affordability driven by rising loans and only modest increases in income. Two states, New South Wales and Victoria, now have average loan sizes exceeding the $400,000 mark.”

Alarmingly, most states and territories saw declines in housing affordability. The only quarterly improvement was seen in the Northern Territory while no change was recorded in Queensland.”

“Once again, New South Wales was the least affordable state or territory in which to buy a home with a further increase in the already highest proportion of the median family income needed to meet average monthly loan repayments. The Australian Capital Territory remained the most affordable jurisdiction for home buyers.”