Housing Affordability Report - reiwa.com · Affordability Report. This edition of the Adelaide Bank/ REIA Housing Affordability Report for the March Quarter 2015 shows a quarterly

Adelaide Bank/REIA Housing Affordability Report

MARCH QUARTER 2015

Housing Affordability Report

The first quarter of 2015 showed an improvement in housing affordability nationally with the proportion of income required to meet loan repayments decreasing by 0.7 percentage points to 30.8%. Compared to the corresponding quarter of 2014, the figure increased by 0.2 percentage points.

When compared to the last quarter, all states and territories saw housing affordability improving with the exception of South Australia where the proportion increased by 0.6 percentage points. The Northern Territory showed the greatest improvement with the proportion of income required to meet loan repayments going down 2.8 percentage points, to 25.3%.

Over the quarter, New South Wales once again remained the least affordable state for homebuyers with the proportion of income required to meet loan repayments 4.2 percentage points above the national average. The Australian Capital Territory is still the most affordable state or territory in which to buy a home with the figure sitting at 19.7%.

Compared to the March quarter of 2014, housing affordability improved in Queensland, Western Australia, the Northern Territory and the Australian Capital Territory. As with the quarterly change, South Australia saw the worst annual decline with the proportion of income required to meet loan repayments rising by 1.0 percentage point.

During the first quarter of 2015, the Reserve Bank of Australia (RBA) introduced a 25 basis points cut – the official cash rate bringing the figure to the historically low level of 2.25%. The gap between variable and three year fixed rates remained at 0.7 percentage points. The quarterly average variable standard interest rate decreased 0.3 percentage points over the quarter and also when compared to the corresponding quarter last year, to 5.3%. The quarterly average three year fixed rate fell 0.3 percentage points to 4.6% during the quarter and also 0.5 percentage points when compared to a year earlier.

Over the quarter, the number of first home buyers decreased 15.7% to 22,182 – a slight increase of 0.5% compared to the figure of twelve months ago. First home buyers now make up 14.9% of the owner-occupier market – the figure is significantly smaller relative to the long-run average of 19.7%.

If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market lost 0.5 percentage points over the quarter; it currently sits at 23.7%.

Over the March quarter, with the exception of Tasmania, all states and territories recorded decreases in the number of loans to first home buyers. The largest drop was seen in the Northern Territory where the figure nearly halved.

Compared to a year ago, the number of first home buyers went up in New South Wales, Victoria, Queensland, the Northern Territory and the Australian Capital Territory. South Australia recorded the largest decline, down by 33.3%.

Housing affordability improves on the back of falling interest rates as loan sizes rise and incomes stall

The average loan size to first home buyers increased 2.0% over the March quarter and by 4.6% compared to the same time last year, to $323,800.

Over the quarter, the average loan size to first home buyers increased in all the states and territories with Tasmania being the only state to record a decrease. The largest jump was seen in the Northern Territory.

Compared to twelve months ago, Tasmania and the Australian Capital Territory were the only jurisdictions to record drops in the average size of a loan to first home buyers while the figure increased 8.3% in South Australia.

The total number of loans (excluding refinancing) decreased 12.8% over the quarter and also 2.4% compared to the March quarter of 2014, to 93,702.

Over the quarter, all states and territories had decreases with the biggest drop recorded in the Northern Territory, down by 25.1%.

Compared to the corresponding quarter of the previous year, the number of loans increased in New South Wales, Victoria and the Australian Capital Territory while the figure fell 11.9% in Western Australia.

Over the first quarter of 2015, the average loan size increased 1.0%, to $358,933. This represents an increase of 6.4% compared to a year earlier.

Over the quarter, with the exception of the Northern Territory, all states and territories recorded increases in the average loan size with South Australia having the biggest jumps, up by 4.7%.

Compared to the March quarter of the previous year, the biggest increase in the average loan size was recorded in South Australia, up by 10.3% while the figure for the Northern Territory went down by 1.0%.

ACT

Proportion offamily incomerequired to pay loan

Median WeeklyFamily Income

Repayments based on data for new borrowers.

$1,610

35.0%

$2,521

19.7%

$1,548

32.8%

$1,594

28.1%

$1,460

28.4%

$1,927

25.3%

$1,923

25.7%

$1,299

25.4%

Australia wide

$1,615

30.8%

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Welcome to the Adelaide Bank/REIA Housing Affordability Report.

This edition of the Adelaide Bank/ REIA Housing Affordability Report for the March Quarter 2015 shows a quarterly improvement in housing affordability, however affordability is still worse compared to the same quarter of 2014.

During the first quarter of 2015, the proportion of median family income

required to meet average monthly loan repayments was 30.8%.

In every state and territory, with the exception of Queensland, housing affordability improved largely driven by further declining interest rates as the average loan size continued its trend upwards and income remained relatively static. In May, REIA

At Adelaide Bank, we understand the business of home ownership. That’s why we make life as easy as possible for brokers and home buyers, with great value products and personalised service.

Our goal is to get people into homes. We’ll find the best way to make it happen, and we’ll find it fast. It’s not just brokers who appreciate our fast turnaround times either.

Real estate agents can rest assured that if a homebuyer is with Adelaide, the personalised service will ensure things run as smoothly as possible. It’s a question worth asking.

welcomed the further cut to the official cash rate introduced by the Reserve Bank that brought the figure to the new low of 2.0%.

Despite housing affordability easing, rental affordability worsened over the quarter with the proportion of median income required to meed median rents rising 0.3 percentage points to 25.1%.

In this regard, REIA was pleased the 2015-16 Budget introduced no change to the current negative gearing or capital gain tax arrangements. REIA had strongly advocated to Government that both of these measures should be retained in their current form and we welcome the Government’s decision to listen to the sector on this important issue.

With the report showing declines in rental affordability, ensuring stability within the sector is imperative to help stimulate housing investment in Australia. Abolition of negative gearing would result in a dwindling supply of properties for rent, escalating rents and reduced opportunities for low to middle income earning Australians to create wealth for self-funded retirement.

Neville Sanders REIA President

Encouraging home ownership should be a key priority for any home lender and Adelaide Bank’s sponsorship of this report also allows us to work with the REIA to contribute to the development of sound public policy that, if implemented, will help ease the supply side problems currently putting pressure on housing affordability.

Until then, Adelaide Bank’s continuing and widely recognised contribution to improving housing affordability is to keep the cost of lending as low as we can, while providing great service through Australia’s growing network of mortgage brokers.

Please come and pay us a visit at our new-look website www.adelaidebank.com.au/itspersonal to see how we can help you or someone you know realise their property ownership dream sooner.

Damian Percy General Manager Adelaide Bank

President’s Message March Quarter 2015

Sponsor’s Message

http://www.adelaidebank.com.au/itspersonal


3

fast factsProportion of family income required to meet:

March 2015

December 2015

March 2014

Home loan repayments 30.8% 31.5% 30.6%

Rent payments 25.1% 24.8% 25.7%

Rental affordability

The Australian weighted average median rent for three-bedroom houses is calculated using Census data and median rents published in Bendigo Bank/REIA Real Estate Market Facts.

Over the March quarter 2015, rental affordability declined with the proportion of income required to meet rent payments rising 0.3 percentage points to 25.1%. Compared to the same quarter of 2014, the figure decreased by 0.6 percentage points and rental affordability improved.

Over the quarter, New South Wales, Western Australia, Tasmania and the Northern Territory saw rental affordability improving. The Northern Territory recorded the biggest decline in the proportion on the median family income required to meet median rents, down by 2.4 percentage points while the figure increased 0.9 percentage points in Queensland.

When compared to the March quarter of the previous year, with the exception of Queensland and South Australia, all states and territories recorded improvement in rental affordability. As with the quarterly change, the Northern Territory saw the best improvement with the proportion falling 3.0 percentage points.

Despite the best improvement, the Northern Territory remained the least affordable state or territory in Australia in which to rent a property. The territory’s proportion of income required to meet rent repayments is 31.0% – 5.9 percentage points higher than the national level. The Australian Capital Territory remained the most affordable state or territory in which to rent a property with the figure sitting at 17.9%.

Table 2 shows rental affordability expressed as the proportion of median weekly family income required to meet weekly rent for a three bedroom house.

Chart 2

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Proportion of Median Weekly Family IncomeSpent on Rent

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The National SnapshotProportion of family income required to meet loan repayments

Table 1: Shows the proportion of family income needed to meet loan repayments

Chart 1 Shows the movement in the proportion of family income required to meet average home loan repayments since March 1998.

Chart 1

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Proportion of family income required to meet average loan repayments - Australia

Table 1: Proportion of family income needed to meet loan repayments

Mar qtr 2015

Dec qtr 2014

Mar qtr 2014

NSW 35.0% 36.2% 34.6%

VIC 32.8% 33.4% 32.3%

QLD 28.1% 28.4% 28.3%

SA 28.4% 27.8% 27.4%

WA 25.7% 26.1% 26.4%

TAS 25.4% 25.9% 25.2%

NT 25.3% 28.1% 26.5%

ACT 19.7% 20.4% 19.8%

AUS 30.8% 31.5% 30.6%

4

Table 2: Proportion of family income needed to meet rent repayments

Mar qtr 2015

Dec qtr 2014

Mar qtr 2014

NSW 28.0% 28.2% 29.0%

VIC 23.3% 22.6% 23.4%

QLD 24.2% 23.3% 24.0%

SA 23.3% 22.6% 23.2%

WA 22.9% 23.0% 25.0%

TAS 26.9% 27.0% 27.1%

NT 31.0% 33.4% 34.0%

ACT 17.9% 17.1% 18.0%

AUS 25.1% 24.8% 25.7%

First Home Buyers

Over the quarter, the number of first home buyers decreased 15.7% to 22,182 – a slight increase of 0.5% compared to the figure of twelve months ago.

The average loan size to first home buyers increased 2.0% over the March quarter and by 4.6% compared to the same time last year, to $323,800.

First home buyers now make up 14.9% of the owner-occupier market. The figure is significantly smaller relative to the long-run average of 19.7%.

If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market lost 0.5 percentage points over the quarter; it currently sits at 23.7%.

First home buyers’ share of all dwellings financed and the average size of their loans from the March quarter 2006 to the March quarter 2015 is shown in Chart 3.

Chart 3

Factors Influencing Home Loan Affordability

A range of factors influence home loan affordability:

• The amount to be borrowed reflects the price of the property being purchased and the borrower’s equity situation.

• The size of the loan, interest rates and the period of the loan determine the average loan repayment.

• The ability to repay the mortgage depends upon the family income.

Chart 4 shows the relationship between the Australian weighted average median house price, median weekly family income and average loan size.

Chart 4

Median House Prices

The Australian median house price rose by 2.4% over the March quarter, to $658,608.

Over the quarter, the median house price rose in all the capital cities with the exception of Brisbane and Perth where the figure dropped by 1.5% and 2.7% respectively.

Compared to the corresponding quarter of the previous year, the median house price went up by 8.9% – and with the exception of Perth and Hobart – all the capitals contributed to the increase.

Detailed data on median prices for houses and other dwellings is available in the Bendigo Bank/REIA Real Estate Market Facts publication, which will be released on June 10.

First Home Buyers' Share of All Dwellings Financed

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Median Family Income and Average Monthly Loan Repayments

The national median weekly family income rose 0.4% to $1,615 during the March quarter of 2015. This represents a 2.5% increase when compared to the same quarter of 2014.

During the first quarter of 2015, the average monthly loan repayment was $2,159 – a drop of 1.8% over the quarter but an increase of 3.2% when compared to the corresponding quarter of the previous year.

The proportion of family income required to meet loan repayments decreased to 30.8%, down from 31.5% in the March quarter – a 0.2 percentage points increase when compared to twelve months ago.

Average Loan (All Borrowers)

The total number of loans (excluding refinancing) decreased 12.8% over the quarter and also 2.4% compared to the March quarter of 2014, to 93,702.

Over the first quarter of 2015, the average loan size increased 1.0%, to $358,933. This represents an increase of 6.4% compared to a year earlier.

Interest RatesDuring the first quarter of 2015, the Reserve Bank of Australia (RBA) introduced a 25 basis points cut to the official cash rate bringing the figure to the historically low level of 2.25%. The gap between variable and three year fixed rates remained at 0.7 percentage points. The quarterly average variable standard interest rate decreased 0.3 percentage points over the quarter and also when compared to the corresponding quarter last year, to 5.3%. The quarterly average three year fixed rate fell 0.3 percentage points to 4.6% during the quarter and also 0.5 percentage points when compared to a year earlier.

Average quarterly variable interest rates were:

Banks – 5.4%, a 0.2 percentage points decrease over the quarter.

Permanent Building Societies – 5.0%, a 0.3 percentage points decline during the first quarter of 2015.

Other lenders – 4.5%, a decrease of 0.3 percentage points over the March quarter.

The average fixed (3 year) interest rates were:

Banks – 4.6%, a 0.3 percentage points decline over the quarter.

Permanent Building Societies – 4.6%, a decrease of 0.2 percentage points during the March quarter of 2015.

Other lenders – 4.4%, a decrease of 0.5 percentage points during the quarter.

Chart 5 shows the movement of the RBA cash rate, the quarterly average standard variable rate and the quarterly average three-year fixed rate over the last five years.

Chart 5

The Home Loan Affordability Indicator The Home Loan Affordability Indicator (HLAI) is the ratio of median family income to average loan repayments. An increasing value reflects improving affordability of housing loans.

Table 3 shows the HLAI for Australia and each state and territory for the March quarter of 2015 and is compared with the preceding quarter and the corresponding quarter of 2014. Percentage changes are shown in Table 4.

A long-term series of the quarterly movements in the HLAI from the March quarter 1997 is shown in Chart 6.

Table 3: Home Loan Affordability Indicators

Mar qtr 2015

Dec qtr 2014

Mar qtr 2014

NSW 28.6 27.6 28.9

VIC 30.5 30.0 31.0

QLD 35.6 35.2 35.3

SA 35.2 35.9 36.5

WA 38.9 38.4 37.9

TAS 39.4 38.6 39.7

NT 39.6 35.6 37.8

ACT 50.6 49.1 50.4

AUS 32.4 31.7 32.6

Quarterly interest rates

Av. Var Rate RBA Cash Rate Av 3yr Fixed Rate

2,02,53,03,54,04,55,05,56,06,57,07,58,08,59,09,5

10,0

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6

Table 4: Percentage Change in HLAI

% Change: Mar’15 – Dec’14

% Change: Mar’15 – Mar’14

NSW 3.6 -1.0

VIC 1.7 -1.6

QLD 1.1 0.8

SA -1.9 -3.6

WA 1.3 2.6

TAS 2.1 -0.8

NT 11.2 4.8

ACT 3.1 0.4

AUS 2.2 -0.6

Chart 6

Table 5: AUSTRALIAMar qtr

2015Dec qtr

2014Mar qtr

2014Home Loan Affordability Indicator (HLAI) 32.4 31.7 32.6

Average HLAI since December quarter 1996 33.4 33.4 33.4

Proportion of family income devoted to meeting average loan repayments

30.8% 31.5% 30.6%

Proportion of family income devoted to meeting median rents 25.1% 24.8% 25.7%

Median weekly family income $1,615 $1,608 $1,576

Average monthly loan repayment $2,159 $2,197 $2,092

Average loan $358,933 $355,541 $337,276

Total number of loans (excl refinancing) 93,702 107,459 96,039

Number of loans to first home buyers 22,182 26,311 22,067

Average first home buyer loan $323,800 $317,300 $309,433

Banks

Average loan $365,302 $361,082 $342,078

Standard variable interest rate 5.4% 5.6% 5.6%

Fixed interest rate 4.6% 4.9% 5.1%

Building Societies

Average loan $268,363 $271,361 $251,344



Other Lenders

Average loan $300,463 $298,316 $294,572



Percentage Change HLAI CPI

Since previous quarter 2.2% 0.2%

Since corresponding quarter last year -0.6% 1.3%

Chart 7

Home loan affordability indicator over time

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Australian Rent and CPI from March Quarter 1999

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7

New South Wales

New South Wales recorded an improvement in housing affordability with the proportion of income required to meet loan repayments falling 1.2 percentage points to 35.0% – an increase of 0.4 percentage points compared to the March quarter of 2014. With the proportion of income required to meet loan repayments 4.2 percentage points higher than the nation’s average, New South Wales remained the least affordable state or territory in which to buy a home.

New South Wales was also the second least affordable rental market in the country and recorded a slight improvement in rental affordability. The proportion of income required to meet median rent payments decreased 0.2 percentage points over the quarter, to 28.0%. Compared to the corresponding quarter of 2014, the proportion decreased 1.0 percentage point – an improvement in rental affordability.

Of the total number of first home buyers that purchased during the March quarter, 22.4% were from New South Wales. The number of loans to first home buyers decreased 18.6% to 4,960. When compared to the figure a year earlier, a rise of 2.0%. First home buyers make up only 11.2% of the state’s owner-occupier market – the lowest level across the nation. The average loan to first home buyers increased 1.4% over the quarter – a rise of 7.9% when compared to the March quarter of 2014, to $356,767.

Over the quarter, New South Wales recorded a 14.5% decrease in the number of loans (excluding refinancing), to 25,578 – a 1.5% increase when compared to the March quarter of 2014. New South Wales is the only state or territory with the average loan size above the $400,000 mark. The figure increased 0.1% over the quarter and 8.2% compared to twelve months ago, to $405,965.

Table 6: NEW SOUTH WALESMar qtr

2015Dec qtr

2014Mar qtr




35.0% 36.2% 34.6%




Average loan $405,965 $405,450 $375,277

Total number of loans (excl. refinancing) 25,578 29,916 25,203



Banks

Average loan $421,279 $418,369 $385,180

Building Societies

Average loan $267,495 $267,476 $249,398

Other Lenders

Average loan $303,794 $316,871 $316,496

Percentage Change HLAI CPI Sydney



Chart 8

Chart 9

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Quarterly value Long term average

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Rents and CPI for Sydney from March 2005

fast factsNSW is the only state or territory with the average loan size above the $400,000 mark.

8

Victoria

Over the quarter, Victoria showed an improvement in housing affordability, with the proportion of income required to meet loan repayments going down by 0.6 percentage points, to 32.8%. Compared to a year earlier, this is a downturn in housing affordability with the figure rising 0.5 percentage points.

Rental affordability worsened over the quarter with the proportion of income required to meet median rents going up by 0.7 percentage points, to 23.3%. The figure decreased marginally by 0.1 percentage point when compared to the March quarter of 2014.

Of the total number of first home buyers that purchased during the March quarter, 29.2% were from Victoria. During the quarter, the number of loans to first home buyers decreased 14.7%, to 6,485, however when compared to the same quarter of the previous year, the state had a 16.7% rise. In Victoria, first home buyers make up 16.2% of the state’s owner-occupier market and in the first quarter of 2015, the average loan to first home buyers was $322,900. This is a rise of 2.2% over the quarter and also an increase of 4.3% when compared to the figure of last year.

In Victoria, the total number of loans (excluding refinancing) went down 12.9% during the quarter but increased 1.6% compared to the March quarter of 2014, to 24,677. At $365,931, the average loan size gained 1.1% over the March quarter and 6.9% when compared to the corresponding quarter of 2014.

Table 7: VICTORIAMar qtr

2015Dec qtr

2014Mar qtr




32.8% 33.4% 32.3%




Average loan $365,931 $361,802 $342,387




Banks

Average loan $368,934 $363,450 $344,585

Building Societies

Average loan n/a n/a $256,447

Other Lenders

Average loan n/a n/a $290,880

Percentage Change HLAI CPI Melb



Chart 10

Chart 11

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Rents and CPI for Melbourne from March 2005

CPI Other dwellings

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fast factsIn Victoria, first home buyers make up 16.2% of the owner-occupier market.


9

Queensland

Housing affordability in Queensland improved compared to the December quarter and also when compared to the March quarter of 2014. The proportion of income required to meet home loan repayments lost 0.3 percentage points during the quarter and 0.2 percentage points over last twelve months and is now 28.1%.

Rental affordability in Queensland worsened over the quarter and when compared to the March quarter of 2014 with the proportion of the median family income required to meet the median rent going up by 0.9 and 0.2 percentage points respectively, to 24.2%.

Over the March quarter, the number of loans to first home buyers in Queensland dropped 12.2%, to 4,321 – an increase of 4.9% when compared to the corresponding quarter last year. Of all Australian first home buyers over the quarter, 19.5% were from Queensland while the proportion of first home buyers of Queensland’s owner-occupier market was 15.0%. The average loan size to first home buyers increased 2.8% during the quarter and also 0.4% compared to a year earlier, to $295,633.

Queensland recorded decreases in the number of loans excluding refinancing over the quarter and also when compared to the March quarter of 2014, down by 9.8% and 4.3% respectively, to 19,958. The average loan size increased 1.9% during the quarter, to $322,618 – a 4.6% rise compared to the last quarter of 2014.

Table 8: QUEENSLANDMar qtr

2015Dec qtr

2014Mar qtr




28.1% 28.4% 28.3%




Average loan $322,618 $316,539 $308,571




Banks

Average loan $325,940 $321,512 $308,042

Building Societies

Average loan n/a n/a n/a

Other Lenders


Percentage Change HLAI CPI Brisbane


Since corresponding quarter last year 0.8% 1.4%

Chart 12

Chart 13

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fast factsOf all Australian first home buyers, 19.5% are from Queensland.

10

South Australia

South Australia was the only state or territory to record a quarterly decline in housing affordability across Australia with the proportion of income required to meet monthly loan repayments increasing 0.6 percentage points, to 28.4%. Compared to the March quarter of 2014, the figure increased 1.0 percentage point.

Rental affordability worsened with the proportion of income required to meet rent payments rising 0.7 percentage points over the quarter and 0.1 percentage point compared to the March quarter of 2014, to 23.3%.

Over the March quarter, the number of loans to first home buyers in South Australia fell 18.7% to 1,182. The state had a 33.3% fall when compared to the same quarter of 2014 – the biggest decline across the country. Of all Australian first home buyers over the quarter, 5.3% were from South Australia while the proportion of first home buyers of South Australia’s owner-occupier market was 12.8%. The average loan size to first home buyers increased over the quarter and also when compared to a year earlier, up by 3.6% and 8.3% respectively to $265,867.

In South Australia, the total number of loans decreased 11.7% over the quarter, to 6,212. This represents a 6.6% drop compared to the March quarter of 2014. At $298,722, the average loan size rose 4.7% over the last quarter of 2014 and 10.3% when compared to twelve months ago. Nationally, the state has the second smallest average loan size.

Table 9: SOUTH AUSTRALIAMar qtr

2015Dec qtr

2014Mar qtr




28.4% 27.8% 27.4%




Average loan $298,722 $285,285 $270,808




Banks

Average loan $308,642 $295,406 $282,742

Building Societies


Other Lenders


Percentage Change HLAI CPI Adelaide

Since previous quarter -1.9% 0.1%


Chart 14

Chart 15

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Rents and CPI for Adelaide from March 2005

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fast factsSouth Australia was the only state or territory to record a decline in housing affordability over the quarter.


11

Western Australia

Western Australia saw an improvement in housing affordability over the quarter and also when compared to the corresponding quarter of 2014 with the proportion of income required to meet loan repayments going down 0.4 and 0.7 percentage points respectively, to 25.7%.

Rental affordability in Western Australia improved with the proportion of family income required to meet the median rent going down by 0.1 percentage point over the quarter and 2.1 percentage points when compared to the year before, to 22.9%.

Western Australia had a 14.6% decrease in the number of loans to first home buyers over the first quarter of 2015, to 4,261. Compared to the same quarter of 2014, the figure decreased 11.6%. At 20.4%, the state has the highest proportion of first home buyers of the owner-occupier market across Australia. The average loan to first home buyers went up 2.5% over the quarter and 3.4% compared to the figure twelve months ago, to $341,867. Of all Australian first home buyers who purchased during the quarter, 19.2% were from Western Australia.

Over the March quarter, the total number of loans (excluding refinancing) went down by 14.2% to 12,984 which is a 11.9% drop compared to the year before. The average loan increased 2.0% over the quarter, to $355,988 – a 2.5% rise when compared to the March quarter of 2014.

Table 10: WESTERN AUSTRALIAMar qtr

2015Dec qtr

2014Mar qtr




25.7% 26.1% 26.4%




Average loan $355,988 $349,174 $347,144




Banks

Average loan $355,830 $348,533 $347,661

Building Societies


Other Lenders


Percentage Change HLAI CPI Perth



Chart 16

Chart 17

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Rents and CPI for Perth from March 2005

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fast factsWestern Australia saw the largest drop in the number of new loans over the year.

12

Tasmania

Tasmania recorded an improvement in housing affordability with the proportion of income required to meet home loan repayments falling 0.5 percentage points to 25.4% – a 0.2 percentage points rise compared to the same figure last year.

Rental affordability in Tasmania improved marginally with the proportion of income to meet median rents sitting at 26.9% – a 0.1 and 0.2 percentage points decrease over the quarter and when compared to the March quarter of 2014 respectively.

Tasmania recorded the only quarterly rise in the number of first home buyers across Australia, up by 2.3% to 408. When compared to the March quarter of 2014, a fall of 4.9%. The average loan to first home buyers went down 3.6% over the quarter and 0.8% compared to the March quarter of the previous year, to $216,700. First home buyers in Tasmania made up 15.9% of the owner-occupier market.

Over the March quarter, the total number of new loans (excluding refinancing) decreased 4.1% to 1,922. Compared to the corresponding quarter of the year before, the figure went down by 1.1%. At $237,595, the average loan size increased 1.1% over the March quarter and also 4.5% compared to the corresponding quarter of 2014.

Table 11: TASMANIAMar qtr

2015Dec qtr

2014Mar qtr




25.4% 25.9% 25.2%




Average loan $237,595 $235,016 $227,365


Number of loans to first home buyers 408 399 429


Banks

Average loan $240,312 $238,102 $235,445

Building Societies


other Lenders


Percentage Change HLAI CPI Hobart



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Rents and CPI for Hobart from March 2005

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fast factsTasmania was the only state or territory where the number of loans to first home buyers increased over the quarter.


13

Northern Territory

Over the March quarter, the Northern Territory saw the biggest improvement in housing affordability over the quarter and also compared to the March quarter of 2014. The proportion of income required to meet loan repayments is now 25.3% – a 2.8 percentage points lower than in the last quarter of 2014 and also 1.2 percentage points less compared to twelve months ago.

The Northern Territory is the least affordable jurisdiction in which to rent with the proportion of income required to meet the median rent sitting at 31.0%. Rental affordability improved over the quarter and also when compared to the year before with the proportion falling 2.4 and 3.0 percentage points respectively.

The Northern Territory recorded the biggest drop in the number of loans to first home buyers over the quarter with the figure almost halving from 300 to 161. Compared to twelve months ago, this represents a 9.5% rise. The average loan to first home buyers went up by 8.3% during the March quarter, showing a 4.4% increase compared to the same quarter a year earlier, to 344,400. First home buyers make up 17.0% of the Territory’s owner-occupier market.

The Northern Territory recorded the biggest quarterly drop in the total number of loans (excluding refinancing), down by 25.1%, to 645 – a 8.9% drop compared to the March quarter of 2014. The average loan went down by 6.9% over the quarter and also 1.0% when compared to twelve months before, to $351,064 – the only decline across the country.

Table 12: NORTHERN TERRITORYMar qtr

2015Dec qtr

2014Mar qtr




25.3% 28.1% 26.5%




Average loan $351,064 $377,253 $354,445

Total number of loans (excl. refinancing) 645 861 708



Banks

Average loan $375,366 $381,679 $371,149

Building Societies


Other Lenders


Percentage Change HLAI CPI Darwin

Since previous quarter 11.2% -0.2%


Chart 20

Chart 21

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Rents and CPI for Darwin from March 2005

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fast factsThe NT had the best improvement in housing affordability over the quarter.

14

Australian Capital Territory

The Australian Capital Territory recorded an increase in housing affordability with the proportion of income required to meet home loan repayments falling by 0.7 percentage points over the March quarter to 19.7%. This represents a 0.1 percentage point decline when compared to the March quarter of 2014.

The Australian Capital Territory also showed a decline in rental affordability over the quarter with the proportion of income required to meet the median rent going up by 0.8 percentage points, to 17.9%. Compared to twelve months ago, the figure lost 0.1 percentage point.

Over the quarter, the Australian Capital Territory recorded a 26.1% decrease in the number of loans to first home buyers, to 404. When compared to twelve months before. This is a rise of 14.1%. During the quarter, first home buyers made up 17.1% of the Territory’s owner-occupier market. The average loan for first home buyers went up 3.6% over the quarter but decreased 2.8% when compared to a year earlier, to $309,933.

The Territory had the second biggest decrease in the number of loans excluding refinancing over the quarter with the figure going down 15.8%, to 1,726. Compared to the March quarter of 2014, the Australian Capital Territory had the biggest jump across the state, up by 4.7%. The average loan size gained 0.1% over the quarter and is now $358,714 –a 3.6% rise compared to the corresponding quarter of 2014.

Table 13: AUSTRALIAN CAPITAL TERRITORYMar qtr

2015Dec qtr

2014Mar qtr




19.7% 20.4% 19.8%




Average loan $358,714 $358,430 $346,396




Banks

Average loan $362,863 $358,486 $347,837

Building Societies


other Lenders


Percentage Change HLAI CPI Canberra

Since previous quarter 3.1% -0.1%


Chart 22

Chart 23

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Rents and CPI for Canberra from March 2005

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fast factsThe ACT remains the most affordable state or territory in which to buy a home or rent.

15

Adelaide Bank/REIA Housing Affordability Report is based on data from all major lending institutions. It is a comprehensive and accurate assessment of the ability of Australians to meet the cost of home purchase. Any differences between information contained in this report and previous editions of the Adelaide Bank/REIA Housing Affordability Report are due to revisions in the database that may be necessary from time to time.

Home Loan Affordability Indicator: A ratio of family income to average loan payments. (An increase denotes easier affordability). The HLAI divided by a (constant) factor of 10 is the number of times by which median family income exceeds average home loan repayments in a full year. The reciprocal value of the HLAI is the proportion of family income that is required to repay the average home loan in a full year.

Loans: Average size and total number for first home buyers and all borrowers (excluding refinancing) are average data over the quarter, based on all lender data from the ABS.

Average Monthly Loan Repayment: Loan repayment figures are calculated from data provided by the ABS, Cannex Pollfax, and financial institutions across Australia. From the June quarter 2012, interest rates are calculated as weighted average interest rates for banks, building societies and other lenders.

Median Weekly Family Income: A family is defined as a married couple with or without dependent children. The major part of family income is adult wages and salaries. Income data are sourced from ABS records, and updated on the basis of movements in average weekly earnings.

Quarterly Median House Prices/ Quarterly Median Vacancy Rates: House price and vacancy data are taken from Bendigo Bank/REIA Real Estate Market Facts publication.

Proportion of Family Income to Meet Rent Payments: The percentage of Median Weekly Family Income required to meet the median rent for a three bedroom house. Rents are obtained from Bendigo Bank/REIA Real Estate Market Facts publication.

Real Estate Institute of AustraliaThe Real Estate Institute of Australia is a federation of state and territory Real Estate Institutes. Formed in 1924, it represents the real estate industry in Australia at national and international levels.

Real Estate House

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Phone: (02) 6282 4277Fax: (02) 6285 2444Website: www.reia.com.auEmail: [email protected]

Adelaide BankAdelaide Bank is a leading customer connected business, operating for more than 100 years. Adelaide Bank was established in January 1994, originating from the Co-operative Building Society of South Australia, which was Australia’s largest building society at that time.

Adelaide Bank is now the dedicated intermediary lending business of Bendigo and Adelaide Bank Limited. We have a specialised focus on supporting intermediaries through continued product innovation and exceptional service levels.

Adelaide Bank’s success is achieved by distributing mortgage products through partnerships with industry professionals. This offers our customers the freedom of choice when sourcing products that best meet their financial needs.

Adelaide Bank Helpline within Australia: 1300 652 220 overseas: +61 8 8300 6000 www.adelaidebank.com.au

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by means of electronic, mechanical, photocopy, recording or otherwise, without the prior consent of the publishers.

© 2014 REAL ESTATE INSTITUTE OF AUSTRALIA ISSN: 1447 6606 Registered by Australia Post. Publication No. PP 299436/00045

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Documents

Housing Affordability Report - reiwa.com · Affordability Report. This edition of the Adelaide Bank/ REIA Housing Affordability Report for the March Quarter 2015 shows a quarterly