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Housing affordability improving but first home buyers disappearing



The first quarter of 2013 saw a slight improvement in housing affordability, with the proportion of income required to meet loan repayments decreasing 0.5 percentage points to 29.9% according to the latest Adelaide Bank/Real Estate Institute of Australia (REIA) Housing Affordability Report.


First home buyers remain cautious

Housing affordability has been slowly improving for seven consecutive quarters, with the proportion of income required at its lowest since the December quarter 2009.

However, the number of new finance commitments to first home buyers dropped 22.5% in the March quarter, a drop of 21.3% compared to the same time last year and first home buyers made up just 14.5% of the owner-occupier market, which is the lowest number since the June quarter 2004.

South Australia was the only state or territory to record a rise in the number of loans to first home buyers, up by 1.8% while the biggest falls were in Queensland and New South Wales where the numbers fell 43.2% and 40.6% respectively.

For the year, Western Australia recorded the largest increase in loans to first home buyers, up by 19.2%.

 

ACT remains most affordable

With the exception of Western Australia and Tasmania, all states and territories recorded improvements in affordability over the March 2013 quarter.

With the proportion of income required to meet loan repayments 12.6 percentage points below the national average, the ACT remained the most affordable state or territory in which to buy a home and despite the country’s third largest improvement in housing affordability, NSW remained the least affordable.

The Northern Territory had the largest improvement in affordability over the year, with the proportion of income required to meet loan repayments, decreasing from 23.5% to 20.3%.

Victoria recorded an improvement in housing affordability, with the proportion of income required to meet loan repayments falling 0.4 percentage points, to 30.2% but rental affordability declined by 0.5 percentage points to 21.7%.