It’s official – housing affordability in Australia is at a crisis point.
A startling report by the Real Estate Institute of Australia reveals that families are now allocating nearly half of their income to mortgage repayments.
Specifically, the average household spends just shy of 48% of their income on home repayments.
The latest Housing Affordability Report released quarterly, indicates a significant decline in affordability—down by 2.7 percentage points as of December 2023.
Leanne Pilkington, REIA President, points to the current cash rate as a key factor in this unprecedented dip.
Since the inception of the REIA’s reporting, this is the lowest affordability has ever been.
Particularly hard-hit are NSW, Victoria, South Australia, Tasmania, and the ACT, where housing affordability is at its lowest in two decades.
Queensland is facing the steepest decline in affordability, with a 2.8% drop in the last quarter alone.
The Reserve Bank of Australia’s decision last month to maintain the official cash rate at 4.35%, a level set in November 2023, plays a significant role in this scenario.
At the same time, rental affordability is also suffering.
The national median rent now consumes a staggering 23.9% of household income.
Except for NSW and the ACT, where rental affordability remained static, all other states and territories experienced a decline in rental affordability.
On a more optimistic note, the report highlights a surge in first-home buyer activity, possibly as a response to the critical rental conditions.
The number of first-home buyers rose to 31,445—an increase of 16.8% over the quarter and 12.8% compared to the same period in 2022.
Additionally, the average loan amount for these buyers climbed to $514,664 in December 2023, marking a 5.5% increase over the past year.
Overall, the total number of loans for owner-occupied dwellings has seen an upswing across all states and territories, ranging from 9.7% to 25.3% over the December quarter.
