The Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report highlighted that primary concern for the national housing market is a lack of supply, with the institute’s president Hayden Groves illuminating how “affordability is expected to worsen unless supply constraint is urgently addressed by state and federal governments”.
Mr Groves explained that over the new year, new loans had decreased 17.2 per cent, with loans from first home buyers dipping by 32.6 per cent. Conversely, loan values throughout the same period increased 11.6 per cent, with the average loan now resting at $612,079.
Adding to this was the decline in rental affordability during the past quarter, which saw the proportion of income required to meet median rent increasing to 22.9 per cent, representing an increase of 0.4 of a percentage point over the quarter, with that rise ballooning to 1.2 per cent over the past 12 months.
Notably, rental affordability improved in Victoria, although it was the only state where that was the case. Tasmania took the crown as the least-affordable state or territory to rent.
“The decline in housing affordability over the June quarter (down 2.7 percentage points) outplaced the decline in rental affordability (down 0.4 percentage points),” Mr Groves said.
“Nationally, the proportion of income required to meet average loan repayments increased to 38.4 per cent, an increase of 4.7 percentage points over the past year. This is due to a combination of rising interest rates and higher average loans with average loan repayments increasing over the past year by $621 per month.
“Housing affordability has declined in all states and territories over the past year with New South Wales having the largest decline.”
He expressed his belief that rental supply will continue to be tight in the future especially considering rental and home sale listings remain firmly at historically low levels. Also threatening the pipeline of new homes for sale and rent are rising building costs and labour shortages.
The institute communicated that its primary objective moving forward will be looking for ways “to better utilise our existing housing stock”, which includes its recently announced Axe the Tax campaign.
“The phase out of stamp duty could increase listings on the market by up to 50 per cent and it is in these big pictures economic and productivity reforms we must invest in during the 47th Parliament in an effort to address housing supply shortages,” it said.
Mr Groves concluded that “whilst the outlook for housing affordability remains relatively gloomy, the next REIA Affordability Report, to be released in December 2022 should paint a clearer picture of the long-term impacts of inflation control measures”.