Affordability in NSW went down 4.6% in the June quarter, while South Australia fell 4.9% over the quarter. The red-hot property market in Western Australia saw affordability down 7.4% - the largest drop across the country.
Victoria declined 1.8% while Tasmania saw no change, though it has now reached its lowest point since March 1980.
According to the REIA, Australian homeowners now need more than a third (33.2%) of family income to meet average loan repayment, the highest proportion required for more than a decade.
REIA President Tony Brasier said that first homebuyers were particularly hurt by the interest rate hike in May with their share of all dwellings financed dropping from 19.1% in April down to 17.4 % in May and 17% June.
"In the short term, the 4% annual increase in the CPI to the June quarter 2006 will also hurt homebuyer's pockets particular highly geared borrowers. The August 2006 interest rate rise is likely to have a further negative impact on first homebuyer sentiment," he said.
Brasier reiterated his call on to the Federal Government to take measures to lift affordability in the housing sector. "To further improve housing affordability, the government needs to index the first home
owner's grant, reduce or abolish state property taxes and improve land sales to ease the affordability."
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