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The Real Estate Institute of Australia’s latest housing affordability report reveals that while the pressure on home owners has stopped climbing, renters are facing a different reality.
Calling it a “tale of two cities,” REIA president Leanne Pilkington noted that it was clear Australians were struggling with rental affordability.
The institute found that nationally, the proportion of income required to meet median rents increased 0.5 percentage points over the first quarter of 2024 to 24.4 per cent. Rental affordability declined in all states and territories, with drops ranging from 0.2 percentage points in Victoria to 0.7 percentage points in Tasmania.
And while rental affordability trended in a different direction for home owners making mortgage repayments, the data still revealed mortgagees to be under stress, with the proportion of their income contributed to housing much higher than for renters.
Home owner income proportion dropped 1 percentage point to 46.7 per cent during Q1 of 2024, which the REIA attributed to stronger wage growth and a pause on interest rate hikes.
“This is the first improvement in housing affordability since a series of successive increases from the March quarter 2021 through to the December quarter 2023 saw this figure reach a high of 47.7 per cent,” Pilkington explained.
“Housing affordability improved in New South Wales, Victoria, Tasmania and the Australian Capital Territory, remained stable in South Australia, and declined in Queensland, Western Australia and the Northern Territory. Improvements ranged from 2.2 percentage points in New South Wales to 0.9 percentage points in Victoria and the Australian Capital Territory,” she reported.
REIA flagged another worrying trend, with first home buyer activity decreasing 17.9 per cent in the first part of the year, though that figure is still 8.3 per cent higher than last year’s depressed figures.
“Over the March quarter, the number of first home buyers decreased in all states and territories. Western Australia had the smallest decrease (-11.5 per cent) and the Northern Territory the largest decrease (-35.9 per cent), although with only 150 loans made to first home buyers, the Northern Territory continues to be the nation’s smallest market. The average loan size to first home buyers increased to $518,510,” Pilkington noted.
The institute also reported that the total number of owner-occupied dwelling loans fell to 70,374, a decrease of 15.8 per cent over the March quarter but an increase of 4 per cent over this time last year. The total number of loans for owner-occupiers decreased in all states and territories over the March quarter, with the Northern Territory the hardest hit at 35.9 per cent, and Tasmania seeing a 7.4 per cent drop in owner-occupier activity.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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