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The Real Estate Institute of Australia (REIA) has been tracking housing affordability since 1996. It says conditions have never been this bad.
The organisation’s latest quarterly report on the state of Australian housing and its financial impact on residents has concluded that the September 2024 quarter represented “the most challenging conditions since the REIA began monitoring in 1996”.
According to REIA’s findings, the proportion of median family income required for average loan repayments climbed to 48.6 per cent in the three months to September, an increase of 0.4 percentage points from the previous quarter.
There was modest improvement in affordability in Tasmania and the Northern Territory, but declines were observed across all other states and territories, with the ACT experiencing the largest drop, of 1.4 percentage points.
It wasn’t just those with mortgages who have been feeling the pinch more than ever. According to the REIA, rental affordability also saw a decline over the same period, with the proportion of income required to cover median rents increasing to 24.9 per cent.
This time, Victoria and Queensland recorded marginal improvements, while the other states fell back. Conditions contracted most sharply in NSW, with affordability falling by 1 percentage point.
REIA president Leanne Pilkington said the figures underscored “the persistent challenges faced by families striving to enter the housing market or manage their existing commitments. Rising mortgage sizes, coupled with stagnant variable interest rates, continue to push affordability further out of reach”.
She said that much could be gleaned from looking at first home buyer activity, with that cohort serving as a “bellwether for market conditions”.
Purchases by first time buyers dropped back over the quarter by 3.9 per cent, though their market participation is still significantly higher than at this point last year, by 9.4 per cent. The projection of a forthcoming rate cut may have helped spur first home buyers to act. Data from earlier in the year also indicated that as many as 40 per cent of first home buyers were being assisted in their purchases by family members, such as parents or grandparents.
The REIA reported that the average loan size for first home buyers increased to $536,561, representing a 0.8 per cent rise over the quarter and a notable 6.7 per cent jump over the past 12 months.
According to Pilkington, the latest quarterly report shows the need for “targeted policy interventions to address housing supply and affordability issues”.
“Without meaningful action, home ownership will remain an increasingly elusive goal for many Australians,” she said.
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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