05/12/2018 - 12:50

First homebuyers fall despite improving affordability

05/12/2018 - 12:50

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Housing affordability is improving in Western Australia, but the number of first homebuyers active in the market has continued to decline, according to new research by the Real Estate Institute of Australia and Adelaide Bank.

First homebuyers fall despite improving affordability
There were 20 per cent more first homebuyers active in WA in the September quarter last year. Photo: Attila Csaszar

Housing affordability is improving in Western Australia, but the number of first homebuyers active in the market has continued to decline, according to new research by the Real Estate Institute of Australia and Adelaide Bank.

REIA and Adelaide Bank’s 'Housing Affordability' report showed improvements in residential affordability in every state except for Queensland, where affordability was stable.

The report indicated the proportion of income required to meet loan repayments in WA was 22.7 per cent in the September quarter, down from 23.9 per cent in the previous three months.

The proportion of income required to pay rent also fell to 16.1 per cent in the September quarter, REIA said, from 16.3 per cent in the three months to the end of June.

Despite the increase in affordability, the number of first homebuyers fell by 5.7 per cent in the September quarter in WA, contributing to a 20 per cent plunge as compared with the same time last year.

The average loan to first-time buyers fell by 3.2 per cent over the quarter, to $308,533.

While WA experienced the largest decrease in the number of loans to first homebuyers, it had the highest proportion of first time purchasers of any Australian state, at 35.1 per cent.

“The decline in first homebuyers is systematic of the credit squeeze that is emerging,” REIA president Malcolm Gunning said.

“While APRA’s restrictions were designed to curb high-risk lending practices, the current practice of reducing loan amounts and increasing approval times across the board is becoming a constraint on economic growth.”

Nationally, NSW experienced the most improvement in housing affordability in the September quarter, while the Northern Territory showed the most improvement in rental affordability.

The number of loans issued across Australia fell by 4.8 per cent, led by the ACT, where the number of loans fell by 7.8 per cent.

Overall, the number of loans issued for housing in Australia was down by 11.9 per cent from the same time last year.

In WA, there were 17.6 per cent fewer loans in the September quarter 2018 as there were in the same period in 2017.

REIA and Adelaide Bank’s 'Housing Affordability' report is based on data from major lenders in Australia, taking into account the ratio of family income to loan payments, the average size and total number of loans, average loan repayments, median weekly family incomes, quarterly median house prices and proportion of family income needed to meet rent payments.

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