Adelaide Bank/REIA Housing Affordability Report DECEMBER QUARTER 2013 Housing Affordability Report The December quarter of 2013 recorded a fall in housing affordability with the proportion of income required to meet loan repayments increasing 1.0 percentage point to 30.8%. However, compared to the same quarter of 2012, affordability improved with the proportion dropping by 1.8 percentage points. With the exception of the Northern Territory, all states and territories recorded a downturn in affordability over the quarter with the largest in New South Wales, where the proportion of income required to meet loan repayments rose by 1.8 percentage points to 35.6%. With the proportion of income required to meet loan repayments 10.6 percentage points below the national average, the Australian Capital Territory remained the most affordable state or territory in which to buy a home, largely due to the high median income. New South Wales remained the least affordable state or territory in which to buy a home, with the proportion 4.8 percentage points higher than the nation’s average. Compared to the December quarter of 2012, all states and territories showed improvements in housing affordability. The ACT recorded the largest while the Northern Territory’s decline in the proportion of income required to meet loan repayments was the nation’s smallest. During the December quarter, the Reserve Bank of Australia (RBA) left the cash rate on hold at 2.5%. The quarterly average variable standard interest rate remained unchanged at 5.6%. This represents a drop of 0.6 percentage points compared to the December quarter of 2012. The quarterly average, three year fixed rate remained unchanged over the quarter and decreased 0.4 percentage points compared to the December quarter of 2012, to 5.1%. First home buyers made up 12.5% of the owner-occupier market compared to 13.6% in the September quarter of 2013. The figure is the lowest since the Australian Bureau of Statistics started to collect data on the activity of first home buyers and is also persistently low compared to the long-run average proportion of 19.9%, despite eight interest rate cuts since November 2011. If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market fell 2.1 percentage points over the quarter and 6.0 percentage points compared to the figure last year, to 18.4%. This is the lowest level since 1991. The number of new finance commitments to first home buyers decreased 3.8% to 20,493 in the December quarter. Compared to the same quarter of 2012, new finance commitments to first home buyers fell 13.5%. Over the December quarter, the number of new finance commitments to first home buyers increased in New South Wales, Queensland, South Australia, Tasmania and the Northern Territory, which had the biggest jump, up by 26.4%. The Australian Capital Territory’s quarterly drop of 36.1% was the largest across the country. Compared Housing is not affordable for first home buyers to the previous year, new finance commitments to first home buyers increased in South Australia, Western Australia and Tasmania. The average loan size to first home buyers increased 4.2% over the December quarter and 3.5% compared to the same time a year before, to $300,333. Over the quarter, increases in the average loan size to first home buyers increased in most centres. Tasmania and the Australian Capital Territory were the only jurisdictions to go down, by 0.2% and 4.0% respectively. The Northern Territory recorded the largest increase, up by 14.8%, making the Territory the most expensive jurisdiction to buy a first home. Compared to the December quarter of 2012, the average loan size to first home buyers increased in most states. The NT’s rise of 12.4% was the largest while the ACT recorded the biggest fall, down by 8.4%. The total number of loans (excluding refinancing) increased 7.1% over the quarter and by 15.2% compared to the December quarter of 2012, to 111,386. Except for the Australian Capital Territory, all states and territories contributed to the quarterly rise with the largest in Tasmania, up by 18.6%. Compared to the December quarter of 2012, increases in the number of loans were seen throughout the country except in the Northern Territory. A 22.3% rise in New South Wales was the largest. The average loan size rose 5.1% over the quarter to $337,551. This is 3.6% higher than the figure of a year earlier. During the December quarter, all states showed increases in the average loan size. New South Wales had the biggest rise, up by 6.9%. Compared to the December quarter of 2012, the Australian Capital Territory was the only jurisdiction to record a drop, down by 5.4% while a 6.0% increase in Western Australia was the country’s biggest. ACT Proportion of family income required to pay loan Median Weekly Family Income Repayments based on data for new borrowers. $1,541 35.6% $2,467 20.2% $1,522 31.6% $1,559 27.9% $1,408 27.4% $1,886 27,1% $1,864 26.0% $1,286 25.1% Australia wide $1,569 30.8%
Transcript
Adelaide Bank/REIA Housing Affordability Report
DECEMBER QUARTER 2013
Housing Affordability Report
The December quarter of 2013 recorded a fall in housing affordability with the proportion of income required to meet loan repayments increasing 1.0 percentage point to 30.8%. However, compared to the same quarter of 2012, affordability improved with the proportion dropping by 1.8 percentage points.
With the exception of the Northern Territory, all states and territories recorded a downturn in affordability over the quarter with the largest in New South Wales, where the proportion of income required to meet loan repayments rose by 1.8 percentage points to 35.6%.
With the proportion of income required to meet loan repayments 10.6 percentage points below the national average, the Australian Capital Territory remained the most affordable state or territory in which to buy a home, largely due to the high median income.
New South Wales remained the least affordable state or territory in which to buy a home, with the proportion 4.8 percentage points higher than the nation’s average.
Compared to the December quarter of 2012, all states and territories showed improvements in housing affordability. The ACT recorded the largest while the Northern Territory’s decline in the proportion of income required to meet loan repayments was the nation’s smallest.
During the December quarter, the Reserve Bank of Australia (RBA) left the cash rate on hold at 2.5%. The quarterly average variable standard interest rate remained unchanged at 5.6%. This represents a drop of 0.6 percentage points compared to the December quarter of 2012. The quarterly average, three year fixed rate remained unchanged over the quarter and decreased 0.4 percentage points compared to the December quarter of 2012, to 5.1%.
First home buyers made up 12.5% of the owner-occupier market compared to 13.6% in the September quarter of 2013. The figure is the lowest since the Australian Bureau of Statistics started to collect data on the activity of first home buyers and is also persistently low compared to the long-run average proportion of 19.9%, despite eight interest rate cuts since November 2011.
If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market fell 2.1 percentage points over the quarter and 6.0 percentage points compared to the figure last year, to 18.4%. This is the lowest level since 1991.
The number of new finance commitments to first home buyers decreased 3.8% to 20,493 in the December quarter. Compared to the same quarter of 2012, new finance commitments to first home buyers fell 13.5%.
Over the December quarter, the number of new finance commitments to first home buyers increased in New South Wales, Queensland, South Australia, Tasmania and the Northern Territory, which had the biggest jump, up by 26.4%. The Australian Capital Territory’s quarterly drop of 36.1% was the largest across the country. Compared
Housing is not affordable for first home buyersto the previous year, new finance commitments to first home buyers increased in South Australia, Western Australia and Tasmania.
The average loan size to first home buyers increased 4.2% over the December quarter and 3.5% compared to the same time a year before, to $300,333.
Over the quarter, increases in the average loan size to first home buyers increased in most centres. Tasmania and the Australian Capital Territory were the only jurisdictions to go down, by 0.2% and 4.0% respectively. The Northern Territory recorded the largest increase, up by 14.8%, making the Territory the most expensive jurisdiction to buy a first home.
Compared to the December quarter of 2012, the average loan size to first home buyers increased in most states. The NT’s rise of 12.4% was the largest while the ACT recorded the biggest fall, down by 8.4%.
The total number of loans (excluding refinancing) increased 7.1% over the quarter and by 15.2% compared to the December quarter of 2012, to 111,386. Except for the Australian Capital Territory, all states and territories contributed to the quarterly rise with the largest in Tasmania, up by 18.6%.
Compared to the December quarter of 2012, increases in the number of loans were seen throughout the country except in the Northern Territory. A 22.3% rise in New South Wales was the largest.
The average loan size rose 5.1% over the quarter to $337,551. This is 3.6% higher than the figure of a year earlier.
During the December quarter, all states showed increases in the average loan size. New South Wales had the biggest rise, up by 6.9%.
Compared to the December quarter of 2012, the Australian Capital Territory was the only jurisdiction to record a drop, down by 5.4% while a 6.0% increase in Western Australia was the country’s biggest.
ACT
Proportion offamily incomerequired to pay loan
Median WeeklyFamily Income
Repayments based on data for new borrowers.
$1,541
35.6%
$2,467
20.2%
$1,488
31.6%
$1,559
27.9%
$1,408
27.4%
$1,886
27,1%
$1,864
26.0%
$1,286
25.1%
Australia wide
$1,569
30.8%
ACT
Proportion offamily incomerequired to pay loan
Median WeeklyFamily Income
Repayments based on data for new borrowers.
$1,541
35.6%
$2,467
20.2%
$1,522
31.6%
$1,559
27.9%
$1,408
27.4%
$1,886
27,1%
$1,864
26.0%
$1,286
25.1%
Australia wide
$1,569
30.8%
2
Welcome to the Adelaide Bank/REIA Housing Affordability Report.
In this edition of the Adelaide Bank/REIA Housing Affordability Report, compared to the same period a year earlier, all states and territories showed improvements in housing affordability over the December 2013 quarter.
The quarter itself showed a drop in affordability with the proportion
of income required to meet loan repayments increasing 1.0 percentage point to 30.8%.
First home buyers again took a tumble and made up only 12.5% of the owner-occupier market compared to 13.6% in
the September quarter of 2013. This is the lowest figure since the Australian Bureau of Statistics started to collect data on the activity of first home buyers.
There is anecdotal evidence that younger Australians are opting for living in rental accommodation or with their parents longer and investing in property rather than becoming first home buyers.
With the removal of assistance (First Home Owner Grant, stamp duty concessions) to first home buyers of established homes in the majority of states and territories, younger Australians may be realising that there are better incentives to becoming investors rather than home owners. For some, this is the only way to get a foot in the door.
With the expectation that interest rates will stay low throughout 2014, we should see a more positive year provided there are no left-field global issues that emerge.
Peter Bushby REIA President
President’s Message December Quarter 2013
In spite of a benign interest rate environment, a historically low number of Australians do not feel they are in a position to step onto the first rung of the property ladder and this is not a good thing. Encouraging home ownership should be a key priority for any home lender and Adelaide Bank is committed to working with the REIA to contribute to the development of sound public policy that, if implemented, will help ease the supply side problems that are putting pressure on housing affordability.
Adelaide Bank’s other 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 www.adelaidebank.com.au to see how we can help you or someone you know to realise the property ownership dream sooner.
Damian Percy General Manager Adelaide Bank
Sponsor’s MessageAs with our last report, this edition of the Adelaide Bank/ REIA Housing Affordability Report reveals a further decline in percentage of buyers entering the market for the first time.
First home buyers are staying away in droves and have been for some time. Together with the other notable change in the December quarter - that the proportion of income required to meet loan repayments is back over thirty per cent - the dearth of first time buyer
activity should be a concern for policy makers, governments and the community generally.
Housing Affordability Report
3
fast factsProportion of family income required to meet:
December 2013
September 2013
December 2012
Home loan repayments 30.8% 29.8% 32.6%
Rent payments 25.4% 25.6% 25.6%
Rental affordability
Table 2 shows rental affordability expressed as the proportion of median weekly family income required to meet weekly rent for a three bedroom house. 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 December quarter 2013, rental affordability improved slightly with the proportion of income required to meet rent payments decreasing 0.2 percentage point to 25.4%. Compared to the same quarter of 2012, the difference was identical.
Over the quarter, Victoria, Queensland, South Australia, Western Australia, the Northern Territory and the Australian Capital Territory recorded improvements in rental affordability. Rental affordability in Tasmania worsened with the proportion of median income required to meet average rents rising 0.9 percentage points.
Despite the best quarterly improvement in rental affordability across the country, the Northern Territory remains 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 33.7% – 8.3 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 18.0% of family income required to meet rent payments.
Chart 2
20
21
22
23
24
25
26
27
Proportion of Median Weekly Family IncomeSpent on Rent
%
Dec
-13
Dec
-12
Dec
-11
Dec
-10
Dec
-09
Dec
-08
Dec
-07
Dec
-06
Dec
-05
Dec
-04
Dec
-03
Dec
-02
Dec
-01
Dec
-00
Dec
-99
Dec
-98
Dec
-97
Proportion of family income required to meet loan repayments
Chart 1 shows the movement in the proportion of family income required to meet average home loan repayments since December 1997.
Chart 1
20
22
24
26
28
30
32
34
36
38
40
Dec
-13
Dec
-12
Dec
-11
Dec
-10
Dec
-09
Dec
-08
Dec
-07
Dec
-06
Dec
-05
Dec
-04
Dec
-03
Dec
-02
Dec
-01
Dec
-00
Dec
-99
Dec
-98
Dec
-97
%
Proportion of family income required to meet average loan repayments - Australia
Table 1: Proportion of family income needed to meet loan repayments
Dec qtr 2013
Sep qtr 2013
Dec qtr 2012
NSW 35.6% 33.8% 37.0%
VIC 31.6% 30.9% 33.4%
QLD 27.9% 27.6% 30.5%
SA 27.4% 26.5% 29.7%
WA 26.0% 25.4% 27.0%
TAS 25.1% 24.6% 27.0%
NT 27.1% 27.2% 28.0%
ACT 20.2% 19.8% 23.5%
AUS 30.8% 29.8% 32.6%
4
Table 2: Proportion of family income needed to meet rent repayments
Dec qtr 2013
Sep qtr 2013
Dec qtr 2012
NSW 28.6% 28.3% 28.1%
VIC 23.0% 23.2% 23.1%
QLD 23.4% 23.9% 24.2%
SA 23.1% 23.2% 23.6%
WA 25.2% 25.8% 25.7%
TAS 26.4% 25.5% 26.3%
NT 33.7% 35.8% 34.9%
ACT 18.0% 18.4% 19.0%
AUS 25.4% 25.6% 25.6%
First Home Buyers
The number of new finance commitments to first home buyers decreased 3.8% to 20,493 in the December quarter. Compared to the same quarter of 2012, new finance commitments to first home buyers went down 13.5%.
The average loan size to first home buyers rose 4.2% over the December quarter and 3.5% over the year, to $300,333.
First home buyers made up 12.5% of the owner-occupier market compared to 13.6% in the September quarter of 2013. The figure is the lowest since the Australian Bureau of Statistics started to collect data on the activity of first home buyers and is also persistently low compared to the long-run average proportion of 19.9%, despite eight interest rate cuts since November 2011.
If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market fell 2.1 percentage points over the quarter and 6.0 percentage points compared to the figure a year earlier, to 18.4%. This is the lowest level since 1991.
First home buyers’ share of all dwellings financed and the average size of their loans from the December quarter 2004 to the December quarter 2013 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 5.7% over the December quarter, to $598,044 – an increase of 13.1% compared to the same time a year earlier.
Over the quarter, increases in median house prices were recorded throughout the country with the largest in Melbourne. Darwin had the smallest rise of 0.8%.
When compared to the December quarter of 2012, with the exception of Canberra, all capital cities showed increases in the median house price. Melbourne had a 21.9% rise followed by Sydney with 15.1%.
Detailed data on median prices for houses and other dwellings is available in the Bendigo Bank/REIA Real Estate Market Facts publication.
First Home Buyers' Share of All Dwellings Financed
100
150
200
250
300
350Average Loan Size, $'000
Percentage(refinancing exlcuded), %
Percentage, %
10
15
20
25
30
35
40
45
Dec
-13
Sep
-13
Dec
-12
Sep
-12
Dec
-11
Sep
-11
Dec
-10
Sep
-10
Dec
-09
Sep
-09
Dec
-08
Sep
-08
Dec
-07
Sep
-07
Dec
-06
Sep
-06
Dec
-05
Sep
-05
Dec
-04
House prices and income
200
250
300
350
400
450
500
550
600
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
2009 2010 2011 2012 2013
$’000
Ave Loan Size
Med Weekly Family IncomeMed Wtd Ave Price
1,000
1,150
1,300
1,450
1,600$
Housing Affordability Report
5
Median Family Income and Average Monthly Loan Repayments
The national median weekly family income rose 1.8% to $1,569 during the quarter. This represents a 3.9% increase when compared to the December quarter of 2012.
Due to the increase in the average loan size over the quarter, average monthly home loan repayments increased 5.0% compared to the September quarter, to $2,092. When compared to the December quarter of 2012, the figure is 1.8% lower.
Over the last quarter of 2013, the proportion of family income required to meet loan repayments increased to 30.8%, up from 29.8% in the September quarter of 2013. When compared to the same time a year earlier, it’s a 1.8 percentage points drop.
Average Loan (All Borrowers)
The total number of new lending commitments (excluding refinancing) issued nationally over the December quarter increased 7.1% to 111,386. This represents a rise of 15.2% compared to the December quarter of 2012.
The average loan size of new lending commitments (excluding refinancing) increased 5.1% over the quarter and 3.6% compared to a year before, to $337,551.
Interest RatesDuring the December quarter, the Reserve Bank of Australia (RBA) left the cash rate on hold at 2.5%.
The gap between variable and three year fixed rates is now 0.5 percentage points. During the quarter, the quarterly average variable standard interest rate remained unchanged at 5.6%. This represents a drop of 0.6 percentage points compared to the December quarter of 2012. The quarterly average, three year fixed rate remained unchanged over the quarter and decreased 0.4 percentage points compared to the December quarter of 2012, to 5.1%.
Average quarterly variable interest rates were:
Banks – 5.6%, unchanged over the December quarter.
Permanent Building Societies – 5.5%, unchanged from the previous quarter.
Other lenders – 5.1%, an increase of 0.1 percentage points from the September quarter of 2013.
The average fixed (3 year) interest rates were:
Banks – 5.1%, unchanged compared to the previous quarter.
Permanent Building Societies – 5.1%, an increase of 0.1 percentage points from the September quarter of 2013.
Other lenders – 5.1%, a 0.1 percentage points increase from the previous 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 December quarter of 2013 and is compared with the preceding quarter and the corresponding quarter of 2012. Percentage changes are shown in Table 4.
A long-term series of the quarterly movements in the HLAI from the December quarter 1997 is shown in Chart 6.
Average HLAI since December quarter 1996 33.4 33.5 33.5
Proportion of family income devoted to meeting average loan repayments
30.8% 29.8% 32.6%
Proportion of family income devoted to meeting median rents 25.4% 25.6% 25.6%
Median weekly family income $1,569 $1,541 $1,511
Average monthly loan repayment $2,092 $1,993 $2,131
Average loan $337,551 $321,295 $325,745
Total number of loans (excl refinancing) 111,386 104,016 96,718
Number of loans to first home buyers 20,493 21,292 23,685
Average first home buyer loan $300,333 $288,133 $290,200
Banks
Average loan $341,971 $326,318 $330,547
Standard variable interest rate 5.6% 5.6% 6.2%
Fixed interest rate 5.1% 5.1% 5.5%
Building Societies
Average loan $256,801 $255,658 $258,961
Standard variable interest rate 5.5% 5.5% 6.0%
Fixed interest rate 5.1% 5.0% 5.5%
Other Lenders
Average loan $292,373 $265,090 $271,638
Standard variable interest rate 5.1% 5.0% 5.7%
Fixed interest rate 5.1% 5.0% 5.5%
Percentage Change HLAI CPI
Since previous quarter -3.0% 0.8%
Since corresponding quarter last year 5.9% 2.7%
Chart 7
Home loan affordability indicator over time
20
25
30
35
40
45
Dec
-13
Dec
-12
Dec
-11
Dec
-10
Dec
-09
Dec
-08
Dec
-07
Dec
-06
Dec
-05
Dec
-04
Dec
-03
Dec
-02
Dec
-01
Dec
-00
Dec
-99
Dec
-98
Dec
-97
HLAI
Australian Rent and CPI from December Quarter 1997
150
200
250
300
350
400
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
100
110
120
130
140
150
160
170
180
190
200
Weighted Median Rent CPI
CPI
Ren
t $
Housing Affordability Report
7
New South Wales
Housing affordability in New South Wales deteriorated over the quarter, with the proportion of income required to meet loan repayments rising 1.8 percentage points to 35.6% – a drop of 1.4 percentage points compared to the December quarter of 2012. With the proportion of income required to meet loan repayments 4.8% higher than the nation’s average, New South Wales remains the least affordable state or territory in which to buy a home.
Already one of the least affordable rental markets in the country, New South Wales recorded a further downturn. The proportion of income required to meet median rent payments increased 0.3 percentage points over the quarter and 0.5 percentage points compared to the December quarter of 2012, to 28.6%, making the state the second most expensive jurisdiction in which to rent.
Of the total number of first home buyers that purchased during the December quarter, 18.7% were from New South Wales. The number of loans to first home buyers increased by 14.7% to 3,829 but when compared to the figure a year before, loans to first home buyers fell by 14.1%. First home buyers make up only 7.7% of the state’s owner-occupier market – the lowest level across the nation. The average loan to first home buyers increased 9.4% over the quarter and 4.7% compared to the December quarter of 2012, to $328,000.
The total number of loans issued (excluding refinancing) increased 12.4% over the quarter and 22.3% compared to the December quarter of 2012 to 32,174. Over the year, New South Wales had the largest rise in the number of loans across the country. The average loan size increased 6.9% over the December quarter and 4.6% over the year, to $383,761.
Average HLAI since December quarter 1996 29.6 29.6 29.6
Proportion of family income devoted to meeting average loan repayments
35.6% 33.8% 37.0%
Proportion of family income devoted to meeting median rents 28.6% 28.3% 28.1%
Median weekly family income $1,541 $1,519 $1,496
Average monthly loan repayment $2,379 $2,226 $2,400
Average loan $383,761 $358,843 $366,798
Total number of loans (excl. refinancing) 32,174 28,619 26,317
Number of loans to first home buyers 3,829 3,337 4,458
Average first home buyer loan $328,000 $299,867 $313,367
Banks
Average loan $393,675 $367,778 $377,059
Building Societies
Average loan $260,467 $258,311 $267,583
Other Lenders
Average loan $308,838 $282,499 $275,285
Percentage Change HLAI CPI Sydney
Since previous quarter -5.1% 0.7%
Since corresponding quarter last year 4.1% 2.6%
Chart 8
Chart 9
22
23
24
25
26
27
28
29
30
31
Dec
-13
Sep
-13
Jun
-13
Mar
-13
Dec
-12
Sep
-12
Jun
-12
Mar
-12
Dec
-11
Sep
-11
Jun
-11
Mar
-11
Dec
-10
Sep
-10
Jun
-10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
120
130
140
150
160
170
180
190
200
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
200
250
300
350
400
450
500
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Sydney from December 2003
fast factsNew South Wales has the lowest proportion of first home buyers on the owner-occupier market across the country.
8
Victoria
Over the quarter, Victoria showed a drop in housing affordability, with the proportion of income required to meet loan repayments rising 0.7 percentage points, to 31.6%. Compared to the December quarter of 2012, housing affordability improved with the proportion decreasing 1.8 percentage points.
Rental affordability improved slightly with the proportion of income required to meet median rent falling 0.2 percentage points over the quarter and 0.1 percentage point compared to the December quarter of 2012, to 23.0%.
Following the Victorian Government’s decision to make purchasers of established dwellings ineligible for the First Home Owner grant, the state had the largest drop in the number of first home buyers, down by 22.7% over the quarter and 28.1% over the year, to 5,146. The proportion of first home buyers of the state’s owner-occupier market was 12.0% and of the total number of first home buyers that purchased in Australia during the quarter, 25.1% were from Victoria. The average loan size to first home buyers increased 3.4% over the quarter and 1.7% compared to the December quarter of 2014, to $293,667.
The total number of loans (excluding refinancing) went up 3.3% during the quarter and 10.3% compared to the December quarter of 2012, to 28,227. The average loan size increased 4.8% over the quarter and 3.6% over the year, to $336,585.
Average HLAI since December quarter 1996 34.3 34.3 34.4
Proportion of family income devoted to meeting average loan repayments
31.6% 30.9% 33.4%
Proportion of family income devoted to meeting median rents 23.0% 23.2% 23.1%
Median weekly family income $1,522 $1,488 $1,470
Average monthly loan repayment $2,086 $1,991 $2,126
Average loan $336,585 $321,083 $324,991
Total number of loans (excl. refinancing) 28,227 27,334 25,587
Number of loans to first home buyers 5,146 6,659 7,159
Average first home buyer loan $293,667 $283,900 $288,633
Banks
Average loan $338,075 $323,767 $326,863
Building Societies
Average loan $271,534 n/a n/a
Other Lenders
Average loan $302,412 $257,786 n/a
Percentage Change HLAI CPI Melb
Since previous quarter -2.5% 0.8%
Since corresponding quarter last year 5.3% 2.7%
Chart 10
Chart 11
0
5
10
15
20
25
30
35
40
Dec
-13
Jun-
13
Dec
-12
Jun-
12
Dec
-11
Jun-
11
Dec
-10
Jun-
10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
115
125
135
145
155
165
175
185
195
205
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
160
210
260
310
360
410
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Melbourne from December 2003
fast factsOf all Australian first home buyers, 25.1% are from Victoria.
Housing Affordability Report
9
Queensland
Over the quarter, housing affordability in Queensland went down with the proportion of income required to meet home loan repayments rising 0.3 percentage points, to 27.9%. Compared to the December quarter of 2012, housing affordability improved with the proportion dropping 2.6% – the second best improvement across the country.
Rental affordability in Queensland was better with the proportion of income required to meet median rents down 0.5 percentage points over the quarter and 0.8 percentage points when compared to the December quarter of 2012, to 23.4%.
Despite Queensland showing a 9.6% increase in the number of loans to first home buyers over the quarter, they made up only 11.8% of the owner-occupier market. Compared to a year earlier, the number of housing finance commitments to first home buyers dropped 19.7%, to 3,617. The average loan to first home buyers went up by 3.4% over the quarter and 2.5% over the year, to $282,533.
The total number of loans (excluding refinancing) increased 7.4% over the quarter and 15.2% compared to the December quarter of 2012, to 22,872. Over the quarter, the average loan size went up by 3.4% to $304,357 – a 1.3% increase compared to the year before.
Average HLAI since December quarter 1996 34.2 34.1 34.1
Proportion of family income devoted to meeting average loan repayments
27.9% 27.6% 30.5%
Proportion of family income devoted to meeting median rents 23.4% 23.9% 24.2%
Median weekly family income $1,559 $1,525 $1,488
Average monthly loan repayment $1,887 $1,826 $1,965
Average loan $304,357 $294,423 $300,433
Total number of loans (excl. refinancing) 22,872 21,302 19,848
Number of loans to first home buyers 3,617 3,299 4,505
Average first home buyer loan $282,533 $273,333 $275,767
Banks
Average loan $305,136 $296,501 $301,399
Building Societies
Average loan n/a n/a n/a
Other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Brisbane
Since previous quarter -1.1% 0.8%
Since corresponding quarter last year 9.1% 2.6%
Chart 12
Chart 13
0
5
10
15
20
25
30
35
40
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
120
130
140
150
160
170
180
190
200
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
140
190
240
290
340
390
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Brisbane from December 2003
fast factsIn Queensland, 27.9% of the median family income is required to meet average loan repayments.
10
South Australia
South Australia showed a decline in housing affordability with the proportion of income required to meet monthly loan repayments rising 0.9 percentage points over the quarter, to 27.4%. Compared to the December quarter of 2012, this is a 2.3 percentage points drop.
Rental affordability in the state improved over the quarter and when compared to the December quarter of 2012 with the proportion of income required to meet rent payments decreasing 0.1 percentage points over the quarter and 0.5 percentage points compared to the previous year, to 23.1%.
Over the December quarter, the number of loans to first home buyers in South Australia increased 4.2% to 1,921. The state had the largest increase across the country compared to the December quarter of 2012, up by 27.5%. Of all Australian first home buyers over the quarter, 9.4% were from South Australia and the average loan size to first home buyers increased 7.6% during the quarter and 5.2% over the year, to $253,733. First home buyers in SA make up 18.3% of the state’s owner-occupier market.
The total number of loans rose 7.0% over the quarter and 21.4% compared to the December quarter of 2012, to 7,424. The average loan increased 5.1% over the quarter and 1.0% compared to the year before, to $269,236.
Average HLAI since December quarter 1996 39.9 40.0 40.0
Proportion of family income devoted to meeting average loan repayments
27.4% 26.5% 29.7%
Proportion of family income devoted to meeting median rents 23.1% 23.2% 23.6%
Median weekly family income $1,408 $1,382 $1,353
Average monthly loan repayment $1,669 $1,589 $1,743
Average loan $269,236 $256,219 $266,485
Total number of loans (excl. refinancing) 7,424 6,940 6,117
Number of loans to first home buyers 1,921 1,843 1,507
Average first home buyer loan $253,733 $235,867 $241,233
Banks
Average loan $277,737 $263,928 $275,261
Building Societies
Average loan n/a n/a n/a
Other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Adelaide
Since previous quarter -2.9% 0.7%
Since corresponding quarter last year 8.9% 2.3%
Chart 14
Chart 15
120
140
160
180
200
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
110
160
210
260
310
360
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Adelaide from December 2003
0
5
10
15
20
25
30
35
40
45
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
fast factsOver the year, South Australia recorded the biggest increase in the number of first home buyers across the country.
Housing Affordability Report
11
Western Australia
Housing affordability in Western Australia fell over the quarter with the proportion of family income required to meet home loan repayments increasing 0.6 percentage points to 26.0%. This represents a 1.0 percentage point drop in the proportion and an improvement in housing affordability when compared to the year before.
Rental affordability improved over the quarter and when compared to the same quarter of 2012. Over the December quarter, the proportion of income required to meet median rent decreased 0.6 percentage points, to 25.2% – a 0.5 percentage points dip when compared to the December quarter of 2012.
Western Australia showed a 2.5% fall in the number of loans to first home buyers over the December quarter, to 5,098. Compared to the same quarter of 2012, the figure rose 1.5%. At 21.6%, the state has the highest proportion of first home buyers of the owner-occupier market across Australia. The average loan to first home buyers increased 1.7% over the quarter and 7.0% over the year, to $322,467.
Over the December quarter, the total number of loans (excluding refinancing) increased 4.0% to 15,935. This represents a 10.0% rise compared to the year before. The average loan was $338,498 – a 3.5% increase over the December quarter and a 6.0% rise when compared to the same quarter of 2012.
Average HLAI since December quarter 1996 38.6 38.6 38.6
Proportion of family income devoted to meeting average loan repayments
26.0% 25.4% 27.0%
Proportion of family income devoted to meeting median rents 25.2% 25.8% 25.7%
Median weekly family income $1,864 $1,841 $1,788
Average monthly loan repayment $2,098 $2,028 $2,090
Average loan $338,498 $326,940 $319,447
Total number of loans (excl. refinancing) 15,935 15,322 14,482
Number of loans to first home buyers 5,098 5,228 5,021
Average first home buyer loan $322,467 $317,167 $301,500
Banks
Average loan $339,244 $329,461 $319,786
Building Societies
Average loan n/a n/a n/a
Other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Perth
Since previous quarter -2.3% 0.7%
Since corresponding quarter last year 3.8% 2.9%
Chart 16
Chart 17
0
5
10
15
20
25
30
35
40
45
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
115
125
135
145
155
165
175
185
195
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
120
170
220
270
320
370
420
470
520
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Perth from December 2003
fast factsWestern Australia has the highest proportion of first home buyers on the owner-occupier market across the country.
12
Tasmania
In Tasmania, the proportion of income required to meet home loan repayments increased 0.5 percentage points to 25.1% over the December quarter. Compared to a year earlier, housing affordability improved with the proportion falling by 1.9 percentage points. The state is the second most affordable jurisdiction in which to buy a home.
Rental affordability deteriorated over the quarter and over the year with the proportion of income required to meet median rent payments rising 0.9 and 0.1 percentage points respectively, to 26.4%.
Following the First Home Builder Boost increase introduced by the Tasmanian Government, the number of first home buyers in Tasmania rose by 16.1% over the quarter and 21.2% compared to the December quarter of 2012, to 440. The average loan to first home buyers dipped 0.2% over the quarter and 2.1% compared to the December quarter of 2012, to $208,833. First home buyers in Tasmania make up 16.0% of the owner-occupier market.
Over the quarter, the total number of new loans (excluding refinancing) increased 18.6% to 2,170 – the largest quarterly increase nationally. Compared to a year earlier that is a 20.4% rise. The average loan size went up by 3.6% over the quarter and 1.9% compared to the December quarter of 2012, to $225,322.
Average HLAI since December quarter 1996 42.5 42.5 42.7
Proportion of family income devoted to meeting average loan repayments
25.1% 24.6% 27.0%
Proportion of family income devoted to meeting median rents 26.4% 25.5% 26.3%
Median weekly family income $1,286 $1,266 $1,237
Average monthly loan repayment $1,397 $1,349 $1,446
Average loan $225,322 $217,549 $221,109
Total number of loans (excl. refinancing) 2,170 1,830 1,802
Number of loans to first home buyers 440 379 363
Average first home buyer loan $208,833 $209,333 $213,233
Banks
Average loan $224,453 $221,739 $232,407
Building Societies
Average loan n/a n/a n/a
other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Hobart
Since previous quarter -2.0% 1.0%
Since corresponding quarter last year 7.5% 2.6%
Chart 18
Chart 19
0
5
10
15
20
25
30
35
40
45
50
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
120
134
148
162
176
190
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
100
150
200
250
300
350
400
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
CPI Other dwellings
Houses
Rents and CPI for Hobart from December 2003
fast factsTasmania recorded the biggest quarterly decline in rental affordability across the country.
Housing Affordability Report
13
Northern Territory
The Northern Territory showed an improvement in housing affordability with the proportion of income required to meet loan repayments dipping 0.1 percentage point over the December quarter and 0.9 percentage points compared to the same quarter of 2012, to 27.1%.
The Northern Territory is the least affordable jurisdiction in which to rent with the proportion of income required to meet median rents sitting at 33.7%. Rental affordability improved though, with the figure declining 2.1 percentage points over the quarter and 1.2 percentage points compared to the year before.
The number of first home buyers’ loan commitments in the Northern Territory increased 26.4% to 187 over the quarter but fell 38.3% compared to the December quarter of 2012. The average loan to first home buyers went up 14.8% during the December quarter, showing a 12.4% increase compared to the same quarter a year earlier, to 338,773. The Northern Territory is the most expensive jurisdiction to buy a first home.
The total number of loans (excluding refinancing) rose 4.2% over the December quarter, to 775. Compared to the December quarter of 2012, the Northern Territory was the only jurisdiction to have a fall in the number of loans, down by 12.0%. The average loan rose 0.5% over the quarter and 5.4% compared to the December quarter of 2012, to $357,292.
Average HLAI since December quarter 1996 42.6 42.7 42.9
Proportion of family income devoted to meeting average loan repayments
27.1% 27.2% 28.0%
Proportion of family income devoted to meeting median rents 33.7% 35.8% 34.9%
Median weekly family income $1,886 $1,872 $1,827
Average monthly loan repayment $2,215 $2,204 $2,217
Average loan $357,292 $355,398 $338,922
Total number of loans (excl. refinancing) 775 744 881
Number of loans to first home buyers 187 148 303
Average first home buyer loan $338,733 $295,167 $301,333
Banks
Average loan $362,173 $360,316 $359,777
Building Societies
Average loan n/a n/a n/a
Other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Darwin
Since previous quarter 0.3% 0.9%
Since corresponding quarter last year 3.4% 4.4%
Chart 20
Chart 21
0
5
10
15
20
25
30
35
40
45
50
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
I
Quarter
Quarterly value Long term average
120
130
140
150
160
170
180
190
200
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
100
160
220
280
340
400
460
520
580
640
700
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
Rents and CPI for Darwin from December 2003
CPI Other dwellings
Houses
fast factsOver the quarter, the Northern Territory recorded the best improvement in housing affordability across the country.
14
Australian Capital Territory
The Australian Capital Territory recorded a fall in housing affordability over the December quarter. The proportion of income required to meet home loan repayments increased 0.4 percentage points to 20.2%. The ACT remains the most affordable state or territory in which to buy a home and when compared to the same time in 2012, housing affordability improved with the proportion down by 3.3 percentage points.
The ACT showed an improvement in rental affordability with the proportion of income required to meet median rent decreasing 0.4 percentage points over the quarter and by 1.0 percentage point over the year, to 18.0%.
Following the ACT Government’s decision to make purchasers of established dwellings ineligible for stamp duty concessions and the First Home Owner Grant, the territory had the largest drop in the number of first home buyers over the quarter and when compared to the December quarter of 2012, down by 36.1% and 30.9% respectively. During the quarter, there were 255 first home buyers in the ACT, or 10.3% of the territory’s owner-occupier market. The average loan for first home buyers fell 4.0% over the quarter and 8.4% compared to the December quarter of 2012, to $304,067.
The Australian Capital Territory was the only jurisdiction to record a quarterly drop in the total number of loans, down by 6.0%. Compared to the December quarter of 2012, the number of loans excluding refinancing went up by 7.4% to 1,809. The average loan size increased 3.0% over the quarter but fell 5.4% compared to the December quarter of 2012, to $348,651.
Average HLAI since December quarter 1986 48.1 48.1 48.1
Proportion of family income devoted to meeting average loan repayments
20.2% 19.8% 23.5%
Proportion of family income devoted to meeting median rents 18.0% 18.4% 19.0%
Median weekly family income $2,467 $2,445 $2,367
Average monthly loan repayment $2,161 $2,100 $2,410
Average loan $348,651 $338,567 $368,473
Total number of loans (excl. refinancing) 1,809 1,925 1,684
Number of loans to first home buyers 255 399 369
Average first home buyer loan $304,067 $316,733 $332,000
Banks
Average loan $348,855 $340,387 $372,182
Building Societies
Average loan n/a n/a n/a
other Lenders
Average loan n/a n/a n/a
Percentage Change HLAI CPI Canberra
Since previous quarter -2.0% 1.0%
Since corresponding quarter last year 16.5% 2.3%
Chart 22
Chart 23
38
40
42
44
46
48
50
52
Dec
-13
Sep-
13
Jun-
13
Mar
-13
Dec
-12
Sep-
12
Jun-
12
Mar
-12
Dec
-11
Sep-
11
Jun-
11
Mar
-11
Dec
-10
Sep-
10
Jun-
10
Mar
-10
Dec
-09
HLA
IQuarter
Quarterly value Long term average
120
130
140
150
160
170
180
190
200
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
100
150
200
250
300
350
400
450
500
Ren
t $
per
wee
k
Co
nsu
mer Price In
dex
Rents and CPI for Canberra from December 2003
CPI Other dwellings
Houses
fast factsAustralian Capital Territory remains the most affordable state or territory in which to buy a home.
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.
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.
Adelaide Bank, a division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL/Australia Credit Licence 237879, 169 Pirie Street Adelaide SA 5000 (S41124) (08/12)
adelaidebank.com.au
We care about housing affordability
We’ve been assisting Australians with home loans for more than 100 years and we’re pleased to support the work of the Real Estate Institute of Australia in preparing the quarterly Home Loan Affordability Report.
Our vision is to deliver well-designed, value-for-money lending solutions and a stress-free experience to aspiring home owners and their chosen advisers. We know that fi nding your perfect home can be stressful enough without worrying about the fi nance. That’s why you can rely on us to make this side of things as smooth as possible.
If you’d like more information about our home loans visit adelaidebank.com.au
