Homeowners are facing the worst housing affordability since 2008, as mortgage repayments eat a huge chunk of their income.
The latest affordability report from the Real Estate Institute of Australia (REIA) showed that the proportion of income required to meet the average loan repayment in the country increased to 44.9% over the March 2023 quarter, the highest since September 2008.
REIA president Hayden Groves said during the quarter, the Reserve Bank of Australia had already increased the cash rate to 3.6%, and the succeeding hikes that brought the cash rate to its current level at 4.10% would likely erode affordability further.
“Affordability has declined in all states and territories except Tasmania and the Northern Territory,” he said.
South Australia suffered the worst decline over the quarter. It joined New South Wales and Victoria as the markets with the worst housing affordability result in the period.
“To put this in perspective, nationally the average loan repayment increased to $4,537 over the March quarter, which is a whopping increase of 35% over the past 12 months — this will, of course, be starker in cities where it is more expensive to buy, and bigger loans are needed.
The REIA report showed that the number of first-home buyers decreased in all states and territories, down to 21,150, representing a 17.9% quarterly and 27.3% annual declines.
Over the period, first-home buyers made up 31.4% of the owner-occupier dwelling commitments.
Mr Groves said a “calm and sensible decision-making” is needed when it comes to housing policy and easing the affordability woes.
“State and federal decision makers would be wise to look at the evidence presented by the Housing Affordability Report, not jump at shadows by looking at draconian and nonsensical measures like rent controls and rent caps,” he said.
“Decision makers should focus on the task at hand to solve the current supply crisis by looking at policies to better use the homes we have already built, and building more houses.”
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.29% p.a. | 5.33% p.a. | $2,773 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.19% p.a. | 5.10% p.a. | $2,742 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
5.39% p.a. | 5.43% p.a. | $2,805 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure |
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