Housing Affordability Jumps

Affordability in residential housing across Australia is showing positive signs of improvement, according to the latest Adelaide Bank/REIA Housing Affordability Report. It revealed that over the December quarter, the proportion of income required to meet loan repayments decreased by 1.4 per cent to 30.4 per cent.

“The improvement in affordability has come about due to the combination of interest rates hitting their lowest point in more than 50 years in real terms and an increase in National Median Weekly Family Income of 2.2 per cent to $1,616 over the quarter,” said Adelaide Bank general manager Damian Percy. “All Australian states recorded an improvement in terms of affordability since the December quarter a year ago.”

While many buyers will be buoyed by the news of improved housing affordability, the report also revealed that house prices are bouncing back, especially in Melbourne, which led the charge in median house price growth over the quarter with a jump of 7.8 per cent. Nationally, Australian homes increased by 3.8 per cent to $533,099. “Melbourne has seen strong growth in the past quarter and buyers are beginning to emerge around the country, encouraged by a continuing increase in housing affordability and a lower interest rate environment,” said Executive Retail Manager of Bendigo and Adelaide Bank Dennis Bice.

The report suggests that first home buyers are continuing to err on the side of caution when it comes to purchasing a home, and in many cases, the current property price recovery is being driven by investors and buyers upsizing or downsizing.

As prices stabilise further, and consumer confidence improves, we can expect to see an increase in transactions taking place.