Housing affordability declined across all Australian states during the December quarter, and New South Wales remains the least affordable state in the country for home buyers.

The proportion of income required to meet home loan repayments was 30.4% in the December quarter, according to the latest Adelaide Bank/REIA Housing Affordability Report. Rising mortgage sizes had more than offset the effect of record low interest rates and modest wage growth, pushing the income required to meet home loan repayments up 0.9 percentage points over the quarter.

However, the proportion of income required to meet home loan repayments declined 1.9 percentage points compared with the corresponding quarter of 2015.

“Over the December quarter, affordability declined in all states,” said Malcolm Gunning, president of the Real Estate Institute of Australia (REIA). “The proportion of first-home buyers in the owner-occupier market was the largest in Western Australia”.

Rental affordability also declined during the December quarter, with the proportion of median family income required to meet rent payments increasing 0.2 percentage points to 24.4%. In contrast, rental affordability improved for the year to December.

Since mid-2012, rental affordability has been improving, resulting from the upswing in housing investment from the end of 2011.

“Rental affordability for the quarter declined in New South Wales, Victoria, Western Australia, Tasmania and the Australian Capital Territory, but improved in Queensland, South Australia and the Northern Territory,” Gunning said.

While the latest results were a mixed bag, not all the findings were negative. There was a 6.6% increase in the number of first-home buyers in the December 2016 quarter, and an increase of 0.5% compared with the December 2015 quarter, according to Damian Percy, general manager at Adelaide Bank.

“First-homebuyers now make up 13.8 per cent of total owner occupied housing,” Gunning said. “This rate has been dropping steadily over the past 5 years, but seems to have stabilised over the past 12 months.”