Australia Property

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Affordability jumps as family incomes improve

Michael Bleby
415 words
4 Jun 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Housing affordability has improved outside NSW and Victoria over the past year as family incomes have risen relative to average loan payments, an Adelaide Bank report says.

The proportion of income needed to meet loan repayments has risen in the two biggest states - up to 35 per cent in NSW in the March quarter from 34.6 per cent a year earlier, and up to 32.8 per cent in Victoria from 32.3 per cent - the figure fell in Queensland, WA, NT and ACT, the quarterly report says.

Affordability worsened in SA and Tasmania from a year earlier, but the measure remained below the national average, which also picked up to 30.8 per cent from 30.6 per cent.

"There is still comparatively good buying in what I call the 'lifestyle capitals' of Adelaide and in Hobart, Perth and Canberra," said Adelaide Bank general manager Damian Percy. "South-east Queensland is also still an affordable favourite with older Australians looking to escape the rat race."

The debate about housing affordability echoed through federal Parliament this week. Prime Minister Tony Abbott rejected warnings of a bubble and accused the Labor party of wanting to lower house prices. Soaring prices in Sydney underpin a recent surge in renovation work, as people who have given up on buying a new house choose to expand their existing one, builder Sven Johnsen said.

Affordability would improve if stamp duty on housing transactions and GST - which could add over 40 per cent to the cost of a new home - was done away with and housing supply increased, the Housing Industry Association said.

In the March quarter, loan affordability rose in Queensland to 28.1 per cent from 28.3 per cent a year earlier. In WA it rose to 25.7 per cent from 26.4 per cent. In NT it showed a marked improvement, going to 25.3 per cent from 26.5 per cent, and in ACT it improved marginally to 19.7 per cent from 19.8 per cent. SA bucked the trend with a drop to 28.4 per cent from 27.4 per cent. Tasmania also dropped to 25.4 per cent from 25.2 per cent.

Nationally, rental affordability improved. The average proportion of family income required to meet rent payments fell to 25.1 per cent from 25.7 per cent, the report showed. Rental affordability improved in everywhere bar Queensland and SA.


Fairfax Media Management Pty Limited

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