Home News Housing affordability deteriorates in the December quarter

Housing affordability deteriorates in the December quarter

Font size :
A shortage of housing across the country is creating a rental crisis among young Australians according to the Real Estate Institute of Australia (REIA). The latest report by the institute revealed that home loan affordability dropped by 3.9% during the last quarter and by 8% over the year. Borrowers now need 35.2% of family income to meet average loan repayments, the highest proportion in 17 years. New South Wales remains Australia's least affordable state, with 37.2% of family income required to meet average loan repayments. Affordability declined by 2.2% during the quarter and by 1.9% in the year. Victoria was amongst the hardest hit with housing affordability dropping by 5.3% over the quarter and 10.8% over the year. This is the lowest affordability level in about 17 years. Homeowners in Victoria now need 34.3% of family income to meet loan repayments. The largest decline in affordability over the quarter occurred in South Australia. Mortgage-paying households now need about 31.9% of their family income as affordability falls by 6.5% for the quarter and 10.8% over the year. Western Australia suffered the biggest drop (18.5%) in affordability levels over the year, thanks to the sharp rise in house values in the state. Families in this state now need 33.8% of the family income to service their home loans. "With the erosion of home affordability, it is not surprising that home ownership amongst 25-34 year olds has fallen, and that first homebuyers only represent 17.7% of total homebuyers financed, well below the 10-year average of almost 22%," says Graham Joyce, president of the REIA. He has referred to young people saving for their first home as the "Rent Generation", as they are stuck in a rental trap paying ever-increasing rents and unable to save for a deposit. "Vacancy rates are down to around 1% everywhere. Agents are getting 5-10 applications for every property that comes up for rent or sale. This is pushing up prices and will be an ongoing problem for years; there are no signs that it will be addressed very quickly," said Joyce. He believes home ownership is not only essential for Gen X and Y now, but also into the future as they will be required to self-fund their retirement with superannuation and voluntary savings.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate

The sprawling redevelopment aims to boost the supply of affordable housing in Sydney Read more

A new suburb will be built in west Melbourne A new suburb will be built in west Melbourne Mount Atkinson will become home to more than 22,000 people over the next 15 years ... Read more

Surging house prices threaten liveability in Melbourne Surging house prices threaten liveability in Melbourne Analysts warn the city could become just as unaffordable as Sydney, if property trends continue ... Read more

More Aussies would benefit from regional hubs linked to cities More Aussies would benefit from regional hubs linked to cities Shorter commutes could spur higher home sales in regional towns, analysts say ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Aug 17, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords