Housing affordability across Australia has finally turned the corner thanks to the positive impact of the first rate cut in September.
The latest data from the Deposit Power/Real Estate Institute of Australia Housing Affordability report showed most states saw a reduction in the proportion of household income needed to meet mortgage repayments.
Nationally, this proportion fell to 38.8%. NSW has taken back its position as the least affordable state with households now needing 41.6% of the family income to pay their loan repayment. This is a considerable improvement from the 42.6% level in the previous quarter. Queensland families saw the affordability level dropping below 40% for the first time in 2008 to 39.9%.
The Northern Territory was the only state recording a significant deterioration in housing affordability in the September quarter. The proportion of household income needed to meet loan repayments climbed to 28.1% from 25.2% in the previous quarter.
While the easing affordability brings some good news to homeowners, investors can take heart that the rental affordability continues to worsen amid soaring rents across the country. Rents increased, not only in nominal terms, but also in relation to income during the same period. Overall, families renting needed 25.2% of their household income to pay their rent.
REIA said vacancy rates show that demand for rental properties remains extremely high in every state and territory. "There is little prospect that this will improve in the short term - a situation exacerbated by the global financial crisis that erupted during the September quarter," it said.