Housing affordability has diminished across Australia over the last year, with Victoria recording one of the most significant changes, according to the Real Estate Institute of Australia’s March Housing Affordability Report.
In the March quarter last year, 27.6 per cent of a family income was required to meet average loan repayments; following increases in house prices and interest rates, it increased by seven per cent to 29.5 per cent in the December quarter, and then 10.5 per cent to 32.6 per cent in the March quarter this year.
There are only two states in which a higher proportion of the family income is required: in New South Wales, where the average is 34.5 per cent; and in Queensland, where it is marginally higher at 33 per cent.
The primary reason for the reduced affordability is the average loan and the average loan repayment has increased.
One year ago the average loan was $259,559 and the repayment was $1620 per month. In the most recent quarter the average loan was $297,813 and the repayment was $2018 per month.
The increase in the cost of repayments of $398 per month outstrips the increase in the median family income of $338 per month.
The underlying reason for the worsening affordability in Victoria is a lack of homes to meet the needs of our growing population. The National Housing Supply Council has said that Victoria has 22,700 fewer homes than was required in 2009, and that the problem of diminishing affordability was unlikely to change until supply either equals or exceeds demand.
Enzo Raimondo
CEO REIV
