Victoria tops again for First Home Buyers Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report

8 March 2017

The December quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows a slight decline in housing affordability nationally with the proportion of median family income required to meet average loan repayments increasing by 0.9 percentage points to 30.4 per cent. Compared to the corresponding quarter in 2015, the figure decreased by 1.9 percentage points.

Damian Percy, General Manager Adelaide Bank said: “The good news is that there has been an increase nationally of 6.6 per cent in the number of first home buyers for the quarter and an increase of 0.5 per cent compared to the December 2015 quarter.

“The number of Australian first home buyers increased to 23,273 comprising almost 14 per cent of the owner occupier market. Average loan sizes increased in NSW, Victoria, Western Australia and the Northern Territory.

“The bad news is that despite this increase in first home buyer numbers, it is still a figure well below the historical average of 18.5 per cent of the owner occupier market since the early 1990’s. Large land releases such as those recently announced in Victoria can be expected to improve opportunities to enter the market.

“Recent public lamentations on the plight facing first home buyers are welcome but one can’t help but think that the traditional unwillingness to confront those voters enjoying structural advantages that continue to keep a fire under house prices will lead to more gnashing of teeth rather than the lowering of prices. If current trends continue, young people in Sydney and, to a lesser extent, Melbourne will be living fabulous Facebook lives - but enduring real lives with lousy housing options.’

"Wherever you decide to live, Adelaide Bank's continuing and widely recognised 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," Mr Percy concluded.

Fast Facts

The average loan size to Australian first home buyers increased by 1.3 per cent over the December quarter to $323, 633.  This was a decrease of 1.5 per cent year on year.

Median rents increase slightly

Nationally, the December quarter saw a slight decline in rental affordability.  The proportion of median family income required to meet median rents increased by 0.2 percentage points to 24.4 per cent.

Across the nation: Victoria tops again for First Home Buyers

Victoria:

Of the total number of Australian first home buyers that purchased during the December quarter, 30.4% were from Victoria. The number of loans to first home buyers in Victoria increased by 9.5%. This represents a 2.1% decrease compared to the December quarter 2015. In Victoria, first home buyers now make up 15.2% of the State’s owner-occupier market. More than 7,000 Victorians bought a first home in the December quarter. Rental affordability declined for the quarter with an increase of 0.4% of income required to meet median rents.

NSW:

The proportion of income required to meet loan repayments is 6.5 percentage points higher than the nation’s average. New South Wales remains the least affordable state or territory in which to buy a home. Of the total number of Australian first home buyers that purchased during the December quarter, 18.4% were from New South Wales. The number of loans to first home buyers increased by 7.8%. When compared to the December quarter 2015, the number of first home buyers decreased by 5%. First home buyers make up only 8.2% of the State’s owner-occupier market – the lowest level across the nation. 4,276 first home buyers entered the market in NSW.  Rental affordability declined for the quarter with an increase of 0.5% of income required to meet median rents.

Queensland:

Of all Australian first home buyers over the quarter, 24.9% were from Queensland while the proportion of first home buyers in the State’s owner-occupier market was 17.4%. The average loan size to first home buyers decreased by 0.8% for the quarter, but recorded a slight increase of 0.1% compared to the December quarter 2015.  Rental affordability improved for the quarter with a decrease of 0.2% of income required to meet median rents.

South Australia:

In the national breakdown, 5.4% of first home buyers were from South Australia while the proportion of first home buyers of the State’s owner-occupier market recorded an increase to 10.9%.  Rental affordability improved by 0.2 percentage points.

Western Australia:

Western Australia recorded a 1.3% increase in the number of first home buyers over the quarter, however, this was a decrease of 11.3% compared to the December quarter of 2015.  WA’s proportion of first home buyers in percentage terms of the owner-occupier market across Australia was 21%.  Rental affordability was steady.

Tasmania:

The number of first home buyers in Tasmania increased by 6.5% for the December quarter or 14.2% compared to the same quarter of 2015.  The average home loan to first home buyers went down by 6.6% to $227,500.  Rental affordability declined with an increase of 1.3% for the quarter or 0.7% year on year.

Australian Capital Territory:

The Australian Capital Territory recorded a 12% increase in the number of loans to first home buyers. When compared to the December quarter 2015, the figure decreased by 3.7%. First home buyers made up 14.5% of the Territory’s owner-occupier market with the average loan for first home buyers decreasing by 1.4% over the quarter to $319,133. Rental affordability declined for the quarter with an increase of 0.3% of income required to meet median rents.  The National Capital remains the most affordable state or territory in which to buy a home or rent.

Northern Territory:

The number of loans to first home buyers in the Northern Territory increased by 4.8% which was a 29.9% rise compared to the December quarter of 2015. The proportion of first home buyers of the Territory’s owner-occupier market was 16.4%. The average loan size to first home buyers increased by 12.2% to $327,367 for the quarter or 3.1% year on year.  Rental affordability improved with a decrease of 0.2%.