Australian Families Spend 36% Of Income On Mortgage
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Australian Families Spend 36% Of Income On Mortgage

Housing affordability continued to slide in the September quarter.

By Kanebridge News
Wed, Dec 8, 2021 1:58pmGrey Clock < 1 min

The REIA’s Housing Affordability Report found that 36.2% of owner-occupiers’ income went to paying their mortgage — a 3.9%  rise over the past year.

The national median weekly family income increased 1.2% in the three months to September to $2023. However, the average monthly loan repayment jumped 4% in the quarter $3177.

The total number of loans to both owner-occupiers and investors fell 7.2% during the same period to 107875, with the average loan increasing to $570,412.

This 4% increase on the previous quarter takes the annual increase to 17.4%.

REIA President Adrian Kelly said it was first home buyers impacted most.

“The number of first-home buyers decreased to 37,782, a fall of 12.6 per cent during the quarter and just a 1 per cent increase over the past 12 months,” said Mr Kelly.

“The number of first-home buyers decreased over the September quarter in all states and territories. South Australia had the largest decrease of 21.6 per cent and the ACT had the smallest decrease of 0.7 per cent.”

The report indicated the average loan to a first-home buyer in the September quarter jumped to $458,256 – 2% higher than the June quarter.

Rental affordability dropped only slightly in the September quarter. The proportion of income required to meet median rent rates rose to 22.9%.


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Australian house values continue to fall – but the pace of decline has slowed

Data reveals house values have continued to decrease, but the rate has slowed as the RBA Board prepares to meet next week

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 


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