Housing Affordability Report
JUNE QUARTER 2013
Affordability Continues to Improve Due to Interest Rate Cuts The June quarter of 2013 recorded an improvement in housing affordability with the proportion of income required to meet loan repayments decreasing 1.2 percentage points to 28.7%. Housing affordability has been improving slightly for the last two years, with the proportion of income required at its lowest since the June quarter of 2003. With the exception of the Northern Territory, all states and territories recorded improvements over the quarter. The largest improvement in affordability was recorded in Queensland where the proportion of income required in order to meet loan repayments dropped by 1.9 percentage points to 26%. With the proportion of income required to meet loan repayments 12.3 percentage points below the national average, the Australian Capital Territory remained the most affordable state or territory in which to buy a home. New South Wales remained the least affordable state or territory in which to buy a home, with the proportion of income required to meet loan repayments 5.6 percentage points higher than the nation’s average. Compared to the same quarter of last year, all states and territories recorded improvements in housing affordability. As with the quarterly change, Queensland recorded the largest improvement. The ACT’s annual decline in the proportion of income required to meet loan repayments was the nation’s smallest. During the quarter, the Reserve Bank of Australia (RBA) cut the cash rate to 2.75%. The quarterly average variable standard interest rate declined 0.2 percentage points, from 6.1% to 5.9%. This represents a decrease of 0.7 percentage points compared to the June quarter of 2012. The quarterly average, three year fixed rate fell by 0.3 percentage points over the quarter and 0.9 percentage points compared to the June quarter of 2012, to 5.1%.
Northern Territory. The largest increase was recorded in Western Australia with the number of loans to first home buyers up by 34.7%. The average loan size to first home buyers fell 1.3% over the quarter but increased 0.6% compared to the June quarter of last year, to $289,233. Over the quarter, all states and territories recorded falls in the average loan size to first home buyers. The Northern Territory’s decline was the country’s largest, down by 6.6%. Compared to the June quarter of last year, the average loan size to first home buyers increased in New South Wales, South Australia and Western Australia while the Northern Territory recorded the biggest drop. The total number of loans (excluding refinancing) increased 21% over the June quarter and 12.9% compared to the same quarter of 2012, to 103,826. With the exception of the Northern Territory all states and territories contributed to the quarterly increase. Compared to the June quarter of 2012, Tasmania and the Australian Capital Territory recorded declines in the number of loans. The largest rise was in Western Australia, up by 25.3%. The average loan size decreased 0.3% over the quarter to $321,413. This is 1.3% higher than the figure of twelve months ago. New South Wales, the Northern Territory and the Australian Capital Territory recorded quarterly increases while the largest falls were in Victoria and Tasmania, down by 1.8% for both states. Compared to the June quarter of 2012, Queensland was the only state or territory to record a drop in average loan sizes, down 1.5%. An increase of 9.5% in the Australian Capital Territory was the country’s largest.
Proportion of family income required to meet loan repayments & Median Weekly Family Income
First home buyers made up 14.6% of the owner-occupier market compared to 14.5% in the previous quarter. This figure remains persistently low compared to the long-run average proportion of 20% despite seven interest rate cuts since November 2011. The number of new finance commitments to first home buyers increased 22.3% to 22,439 in the June quarter. Compared to the June quarter of 2012, new finance commitments to first home buyers decreased 8.8%.Over the quarter, the Northern Territory was the only jurisdiction to record a drop in the number of loans to first home buyers, down by 28.6%. The biggest rise was in Victoria where the number of first home buyers went up 27.4%. Compared to the June quarter of 2012, the number of loans to first home buyers decreased in New South Wales, Queensland and the
Adelaide Bank/REIA Housing Affordability Report
President’s Message June quarter of 2013 Welcome to the Adelaide Bank/REIA Housing Affordability Report. The second quarter of 2013 has seen further improvement in housing affordability, with the proportion of income required to meet loan repayments falling 1.2 percentage points to 28.7%. That means that housing affordability has been slightly improving for two consecutive years now, and the proportion of income required is at its lowest since the June quarter of 2003. All states and territories recorded improvements over the quarter except for the Northern Territory. During the quarter, the Reserve Bank of Australia (RBA) cut the cash rate to a historically low 2.75% and the number of new
Sponsor’s Message Adelaide Bank believes that high levels of home ownership underpin strong and resilient communities, which is why we do our best to lower the cost of lending as much as we can while still providing the great service and fast approval turnaround times that people have come to expect from our bank. This is particularly important in property markets that appear to be gathering momentum in many parts of Australia. Housing affordability is an issue that has emerged as one of the hot-button issues, particularly over the course of the recent Federal Election campaign. It’s not hard to see why. The laws of supply and demand have a great deal to do with affordability and this is a challenge that the incoming government would be wise to pay close attention to. In cities such as Sydney, which is generally regarded as the city that leads the rest of the Australian residential property market, real estate agents are letterboxing home-owners looking for listings in some areas - particularly for larger three to five bedroom homes in the sub$750K range. That’s a pretty clear indicator of high demand, but why is demand high? People have been putting off entry into the market as first-home buyers and they’ve delayed decisions to upsize or downsize due to economic uncertainty. Little kids don’t stop growing into bigger kids when there’s a downturn in the economy as people living in apartments well know.
2
finance commitments to first home buyers increased 22.3%. Despite this increase, new finance commitments to first home buyers decreased 8.8% compared to the June quarter of 2012. First home buyers are still struggling. They made up 14.6% of the owner-occupier market compared to 14.5% in the previous quarter and the figure remains persistently low compared to the long-run average of 20%, despite seven interest rate cuts since November 2011. According to the QBE Lenders’ Mortgage Insurance 2013 Mortgage Barometer Report, 84% of first home buyers believe property prices are close to or above what they can afford and 69% worry they will never be able to afford their own home. A recent Auspoll found housing to be the number one issue amongst voters and the recent Genworth Homebuyer Confidence Index found that 70% of non-property owners think that the Australian dream of homeownership is unrealistic. The availability of affordable housing is a goal that is espoused by governments and all sectors of the community, yet at the national level there is no comprehensive policy or plan for its achievement. In the lead up to the federal election, that’s what REIA would like to see. Peter Bushby REIA President
For younger Australians, apartments are often the first type of dwelling they purchase before they settle down and while there may be oversupply in some markets such as Melbourne, the type of housing in demand is also shifting in line with changing demographics. There is an increase in the number of households who now live with grandparents, children and grandchildren under the same roof - and not surprisingly, they prefer larger houses. The problem is we haven’t been building them. No shortage of apartments, but not this kind of housing stock. Combine this factor with some simple back of the envelope mathematics. 300,000 babies are born every year, 145,000 people die. 190,000 people migrate to Australia and about 15,000 leave permanently. That’s an increase in Australia’s population of 330,000. Our friends in housing construction at the Housing Industry Association are telling us that Australia is on track to build just 143,800 new homes this year. That’s down significantly from 2003, when the construction industry built 168,580 homes. That’s also significantly down on the most recent ten-year average of 155,000 new builds. Add to this the fact that there are also 15,000 fewer builders in the game compared to 5 years ago, the fact that you can’t train new builders overnight and it looks like there will be upward pressure on prices in the not too distant future. We’re building 25,000 fewer homes than we did a decade ago and our population is growing at the rate of 330,000 people per year. To echo the REIA President’s views, I’d say that we need to get cracking on some Federal policies in league with the States that tackle supply and affordability issues as a matter of increasing urgency. Damian Percy General Manager Adelaide Bank
Housing Affordability Report
Rental affordability
Proportion of family income required to meet loan repayments
Table 2 shows rental affordability expressed as the proportion of median weekly family income required to meet weekly rent for a three bedroom house. The Australian weighted average median rent for three bedroom houses is calculated using Census data and median rents published in Bendigo Bank/REIA Real Estate Market Facts.
Chart 1 shows the movement in the proportion of family income required to meet average home loan repayments since June 1990.
Chart 1
Over the June quarter of 2013, rental affordability improved with the proportion of income required to meet rent payments decreasing 0.7 percentage point to 23.7%. Compared to the June quarter of 2012, the proportion of income required to meet rent payments decreased 0.8 percentage points.
Proportion of income required to meet monthly loan repayment – Australia
% 40
Over the quarter, all states and territories recorded improvements in rental affordability. The Australian Capital Territory recorded the largest improvement with the proportion of median income required to meet average rents falling 1.2 percentage points.
35
30
With 27.2% of family income required to meet rent payments, New South Wales remained the least affordable state or territory in Australia in which to rent a property. The Australian Capital Territory remained the most affordable state or territory in which to rent a property with only 14.5% of family income required to meet rent payments.
25
Jun-13
Jun-12
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-94
Jun-93
Jun-92
Jun-91
15
Jun-90
20
Chart 2
25
31.8%
22
27.9%
30.5%
21
SA
29.5%
30.6%
32.0%
20
WA
21.2%
22.6%
23.3%
TAS
23.9%
25.6%
25.5%
NT
21.0%
20.3%
22.9%
ACT
16.4%
17.3%
17.2%
AUS
28.7%
29.9%
31.9%
fast facts Proportion of family income required to meet: June qtr 2013
March qtr 2013
June qtr 2012
Home loan repayments
28.7%
29.9%
31.9%
Rent payments
23.7%
24.4%
24.5%
3
Jun 13
30.2%
26.0%
Jun 12
28.8%
Jun 11
VIC QLD
Jun 10
23
Jun 09
37.4%
Jun 08
34.5%
Jun 07
34.3%
Jun 06
NSW
Jun 05
24
Jun 04
June qtr 2012
Jun 03
March qtr 2013
Jun 02
June qtr 2013
26
Jun 01
Table 1: P roportion of family income needed to meet loan repayments
Proportion of Median Weekly Family Income Spent on Rent
%
Factors Influencing Home Loan Affordability
Table 2: P roportion of family income needed to meet rent repayments June qtr 2013
March qtr 2013
June qtr 2012
NSW
27.2%
27.8%
28.1%
VIC
21.0%
21.4%
21.8%
QLD
21.4%
22.5%
22.6%
SA
24.9%
25.6%
25.8%
WA
21.1%
21.6%
21.0%
TAS
24.0%
24.7%
25.7%
A range of factors influence home loan affordability: • The amount to be borrowed reflects the price of the property being purchased and the borrower’s equity situation. • The size of the loan, interest rates and the period of the loan determine the average loan repayment. • The ability to repay the mortgage depends upon the family income.
NT
26.6%
27.0%
23.6%
Chart 4 shows the relationship between the Australian weighted average median house price, median weekly family income and average loan size.
ACT
14.5%
15.7%
16.0%
AUS
23.7%
24.4%
24.5%
Chart 4 House prices and income
1600
500 450
1400
400 350
1200
300
2009 Med Wtd Ave Price
Chart 3
2010
2011
2012
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
200
June
250
Jun
First home buyers’ share of all dwellings financed and the average size of their loans from the June quarter of 2004 to the June quarter of 2013 is shown in Chart 3.
550
Mar
First home buyers made up 14.6% of the owner-occupier market compared to 14.5% in the previous quarter. The figure remains persistently low compared to the long-run average proportion of 20% despite seven interest rate cuts since November 2011.
1800
Dec
The average loan size to first home buyers decreased 1.3% over the quarter but increased 0.6% compared to the June quarter of last year, to $289,233.
$
Sep
The number of new finance commitments to first home buyers increased 22.3% to 22,439 in the June quarter. Compared to the same time last year, new finance commitments to first home buyers decreased 8.8%.
$’000 600
Jun
First Home Buyers
1000
2013
Med Weekly Family Income
Ave Loan Size
First home buyers' share of home loans issued 350
Average loan size $'000
Percentage
35
4
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
10 Jun-08
100 Dec-07
15
Jun-07
150
Dec-06
20
Jun-06
200
Dec-05
25
Jun-05
250
Dec-04
30
Jun-04
300
Median House Prices The Australian median house price increased by 3.3% over the quarter, to $549,898. Compared to the same time last year, the median house price increased by 6.1%. Sydney, Melbourne, Brisbane, Adelaide and Darwin contributed to the quarterly increase while Perth, Canberra and Hobart had falls. The median house price increased the most in Melbourne, up by 7.2%; Hobart’s decline of 3.5% was the biggest of the capitals. When compared to the June quarter of last year, Hobart was the only capital city to record a decline in the median house price, down by 6.1%. As with the quarterly change, Melbourne’s rise of 8.4% was the nation’s largest. Detailed data on median prices for houses and other dwellings is available in Bendigo Bank/REIA Real Estate Market Facts publication.
Housing Affordability Report
% 9.5 8.5 7.5 6.5
The proportion of family income required to meet loan repayments decreased to 28.7%, down from 29.9% in the previous quarter. When compared to the same time in 2012, the decline is by 3.2 percentage points.
5.5
Average Loan (All Borrowers)
2.5
The average loan size of new lending commitments (excluding refinancing) declined 0.3% over the last quarter but increased 1.3% compared to the June quarter of the previous year, to $321,413.
Interest Rates During the June quarter, the Reserve Bank cut the cash rate to its historically low level of 2.75%. The gap between variable and three year fixed rates remained at 0.8 percentage points. The quarterly average variable standard interest rate dropped 0.2 percentage points, from 6.1% to 5.9%. This represents a decrease of 0.7 percentage points compared to the June quarter of 2012. The quarterly average, three year fixed rate fell by 0.3 percentage points over the quarter and 0.9 percentage points compared to the June quarter of 2012, to 5.1%. Average quarterly variable interest rates were: Banks – 5.9%, decrease of 0.3 percentage points over the June quarter.
Av. Var Rate
RBA Cash Rate
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Jun-10
Dec-10
3.5
Jun-08
The total number of new lending commitments (excluding refinancing) issued nationally over the June quarter increased 21%, to 103,826. This represents an increase of 12.9% compared to the same quarter of 2012.
4.5
Dec-09
Over the quarter, average monthly home loan repayments went down 2.6% to $2,050 underpinned by declines in the average loan size and drops in interest rates. Compared to the June quarter of 2012, average monthly loan repayments fell by 4.8%.
Quarterly interest rates
Jun-09
The national median weekly family income rose 1.2% to $1,646 during the June quarter of 2013. This represents a 5.5% increase when compared to the same time last year.
Chart 5
Dec-08
Median Family Income and Average Monthly Loan Repayments
Av 3yr Fixed Rate
The Home Loan Affordability Indicator The Home Loan Affordability Indicator (HLAI) is the ratio of median family income to average loan repayments. An increasing value reflects improving affordability of housing loans. Table 3 shows the HLAI for Australia and each state and territory for the June quarter of 2013 and is compared with the preceding quarter and the corresponding quarter of 2012. Percentage changes are shown in Table 4. A long-term series of the quarterly movements in the HLAI from June 1993 is shown in Chart 6.
Table 3: Home Loan Affordability Indicators June qtr 2013
March qtr 2013
June qtr 2012
Permanent Building Societies – 5.7%, a decline of 0.3 percentage points from the previous quarter.
NSW
29.2
29.0
26.7
Other lenders – 5.3%, a drop of 0.3 percentage points from the first quarter of 2013.
VIC
34.7
33.1
31.4
QLD
38.5
35.8
32.8
SA
33.9
32.7
31.3
Banks – 5.1%, a decrease of 0.3 percentage points during the June quarter.
WA
47.2
44.3
43.0
TAS
41.9
39.0
39.2
Permanent Building Societies - 5.2%, a drop of 0.2 percentage points from the previous quarter.
NT
47.7
49.1
43.7
ACT
61.0
57.7
58.3
AUS
34.8
33.5
31.4
The average fixed (3 year) interest rates were:
Other lenders – 5.1%, a decrease of 0.3 percentage points from the March quarter 2013. Chart 5 shows the movement of the RBA cash rate, the quarterly average standard variable rate and the quarterly average three-year fixed rate over the last five years.
5
Table 4: Percentage Change in HLAI % Change: June‘13 - March 13
% Change: June‘13 - June‘12
NSW
0.7
9.4
VIC
4.8
10.5
QLD
7.5
17.4
SA
3.7
8.3
WA
6.5
9.8
TAS
7.4
6.9
NT
-2.9
9.2
ACT
5.7
4.6
AUS
3.9
10.8
Table 5: AUSTRALIA
Chart 6 Home loan affordability indicator over time HLAI 55
March 2013
June 2012
Home Loan Affordability Indicator (HLAI)
34.8
33.5
31.4
Average HLAI since March quarter 1980
38.4
38.4
38.5
Proportion of family income devoted to meeting average loan repayments
28.7%
29.9%
31.9%
Proportion of family income devoted to meeting median rents
23.7%
24.4%
24.5%
Median weekly family income
$1,646
$1,626
$1,560
Average monthly loan repayment
$2,050
$2,106
$2,155
Average loan
$321,413
$322,227
$317,358
50
Total number of loans (excl refinancing)
103,826
85,797
91,982
45
Number of loans to first home buyers
22,439
18,355
24,602
40
Average first home buyer loan
$289,233
$293,067
$287,600
35
Banks $325,732
$326,875
$327,317
Average loan
30 25
5.9%
6.2%
6.6%
5.1%
5.4%
6.0%
$254,162
$255,060
$257,526
Average loan
Chart 7
Standard variable interest rate
5.7%
6.0%
6.4%
Fixed interest rate
5.2%
5.4%
6.1%
$274,021
$274,822
$227,485
Other Lenders Average loan
Australian Rent and CPI from March Quarter 1997
400
200
350
180 170
300
160 140 130
200
120 110
150
Weighted Median Rent
6
CPI
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
100
CPI
150 250
Standard variable interest rate
5.3%
5.6%
6.1%
Fixed interest rate
5.1%
5.4%
6.0%
Percentage Change
190
1998
Standard variable interest rate Fixed interest rate Building Societies
Jun-13
Jun-11
Jun-09
Jun-07
Jun-05
Jun-03
Jun-01
Jun-99
Jun-97
Jun-95
Jun-93
20
Rent $
June 2013
HLAI
CPI
Since previous quarter
3.9%
0.4%
Since corresponding quarter last year
10.8%
2.4%
Housing Affordability Report
Chart 8 Long term average
30 25 20 15 10 5
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
0 Dec-09
Of the total number of first home buyers that purchased during the June quarter, 14.3% were from New South Wales. Over the quarter, the number of loans to first home buyers increased by 20.8% 3,201. When compared to the figure a year ago, loans to first home buyers decreased by 41.5%. This is the largest annual decline in the number of first home buyers’ commitments across the country. The average loan to first home buyers fell 0.2% over the quarter but rose 2.2% compared to the June quarter of 2012 to $309,300. During the June quarter, first home buyers in NSW made up only 7.3% of the owneroccupier market.
Quarterly value
35
Sep-09
Over the quarter, New South Wales’ rental affordability improved by 0.6 percentage points. The proportion of income required to meet median rent payments fell to 27.2%. Compared to the June quarter of last year, it’s a drop of 0.9 percentage points.
40
Jun-09
Housing affordability in New South Wales improved over the quarter, with the proportion of income required to meet loan repayments decreasing 0.2 percentage points to 34.3%. This figure dropped 3.1 percentage points compared to the June quarter of last year. Despite the fall, with the proportion of income required to meet loan repayments 5.6% higher than the nation’s average, New South Wales remains the least affordable state or territory in which to buy a home.
HLAI
New South Wales
Quarter
Chart 9 Rents and CPI for Sydney from June 2003
The total number of loans issued (excluding refinancing) increased 26.8% over the quarter and 13.9% compared to the June quarter of last year to 28,262. The average loan size increased 1.7% over the quarter and 0.8% compared to the same quarter of 2012, to $360,278.
180
500 450
June 2013
March 2013
June 2012
Home Loan Affordability Indicator (HLAI)
29.2
29.0
26.7
Average HLAI since March quarter 1980
33.5
33.6
33.7
$2,298
$2,314
$2,427
$360,278
$354,092
$357,435
Total number of loans (excl. refinancing)
28,262
22,284
24,817
Number of loans to first home buyers
3,201
2,650
5,472
Average first home buyer loan
$309,300
$309,967
$302,500
$369,092
$362,948
$371,455
$254,823
$257,032
$260,201
$289,222
$294,523
$249,110
Banks
Building Societies
Other Lenders Average loan Percentage Change
Other dwellings
CPI Houses
fast facts New South Wales remains the least affordable state or territory in which to buy a home or rent.
CPI Sydney
Since previous quarter
0.7%
0.4%
Since corresponding quarter last year
9.4%
2.6%
2013
$1,496
2012
$1,548
2011
$1,546
2010
Median weekly family income
200
2009
28.1%
2008
27.8%
2007
27.2%
2006
Proportion of family income devoted to meeting median rents
2005
37.4%
Average loan
135
2004
34.5%
Average loan
300
2003
34.3%
Average monthly loan repayment
150
350
250
Proportion of family income devoted to meeting average loan repayments
Average loan
Rent $ per week
Table 6: NEW SOUTH WALES
7
120
Consumer Price Index
165 400
Chart 10
Over the quarter, Victoria recorded an improvement in housing affordability, with the proportion of income required to meet loan repayments falling 1.4 percentage points, to 28.8%. Compared to the June quarter of 2012, the proportion fell 3.0 percentage points.
Long term average
35 30 25 20 15
The total number of loans (excluding refinancing) increased during the June quarter by 21.2% to 27,075. Compared to the same time last year, the total number of loans rose 7.9%. The average loan size fell 1.8% over the quarter but was up 0.2% compared to the same time last year, to $317,023.
10 5 Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Jun-10
Dec-10
0 Jun-09
Victoria recorded a rise in the number of loans to first home buyers over the quarter, up by 27.4% to 7,717. Compared to the June quarter of 2012, the figure increased 3.2%. The average loan to first home buyers fell 1.5% over the quarter and 1.4% compared to the June quarter of 2012, to $284,000. Of the total number of first home buyers that purchased in Australia during the first quarter of the year, 34.4% were from Victoria.
Quarterly value
40
HLAI
Rental affordability also improved with the proportion of income required to meet median rents dropping 0.4 percentage points over the quarter and 0.8 percentage points compared to the June quarter of 2012, to 21%.
45
Dec-09
Victoria
Quarter
Chart 11 Rents and CPI for Melbourne from June 2003 360
180
340
Table 7: VICTORIA
31.8%
Proportion of family income devoted to meeting median rents
21.0%
21.4%
21.8%
Median weekly family income
$1,618
$1,611
$1,560
Average monthly loan repayment
$2,022
$2,109
$2,149
$317,023
$322,718
$316,547
Total number of loans (excl. refinancing)
Average loan
27,075
22,342
25,100
Number of loans to first home buyers
7,717
6,057
7,478
Average first home buyer loan
$284,000
$288,433
$287,900
$318,748
$324,746
$322,537
$263,054
$302,980
$278,500
$267,813
$267,411
$227,416
HLAI
CPI Melb
Since previous quarter
4.8%
0.2%
Since corresponding quarter last year
10.5%
2.2%
220
135
200 180 160
CPI
2013
30.2%
2012
28.8%
150
240
2011
Proportion of family income devoted to meeting average loan repayments
260
2010
41.1
2009
40.9
2008
40.8
280
2007
31.4
2006
33.1
2005
34.7
Average HLAI since March quarter 1980
165
300
2004
Home Loan Affordability Indicator (HLAI)
320
2003
June 2013
Rent $ per week
March 2013
120
Other dwellings
Houses
Banks Average loan Building Societies Average loan Other Lenders Average loan Percentage Change
8
fast facts Over the quarter, Victoria recorded the largest jump in the number of loans to first home buyers across the country.
Consumer Price Index
June 2013
Housing Affordability Report
Chart 12
Queensland recorded the largest improvement in housing affordability across the country. The proportion of income required to meet home loan repayments decreased 1.9 percentage points during the June quarter, to 26%. When compared to the same time last year, this figure went down by 4.5 percentage points.
45
The state’s improvement in rental affordability was also the biggest across Australia. The proportion of income required to meet median rents dropped 1.1 percentage points to 21.4%. Compared to the June 2012 quarter, the proportion fell by 1.2 percentage points.
25
HLAI
30
10 5
27.9%
30.5%
Proportion of family income devoted to meeting median rents
21.4%
22.5%
22.6%
Median weekly family income
$1,680
$1,622
$1,546
Average monthly loan repayment
$1,890
$1,965
$2,043
$296,348
$300,744
$300,884
Total number of loans (excl. refinancing)
Average loan
20,395
17,595
18,271
Number of loans to first home buyers
2,998
2,557
5,116
Average first home buyer loan
$275,800
$283,267
$278,400
$298,095
$302,661
$305,257
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Brisbane
Since previous quarter
7.5%
0.5%
Since corresponding quarter last year
17.4%
2.0%
Jun-13
Dec-12
Jun-12
Dec-11
148
190
134
140
120
2013
26.0%
240
2012
Proportion of family income devoted to meeting average loan repayments
162
2011
39.4
290
2010
39.3
176
2009
39.3
340
2008
Average HLAI since March quarter 1980
190
2007
32.8
390
2006
35.8
Jun-11
Rents and CPI for Brisbane from June 2003
2005
38.5
Dec-10
Chart 13
2004
Home Loan Affordability Indicator (HLAI)
Jun-10
Quarter
Rent $ per week
June 2012
Dec-09
Jun-09
0
Other dwellings
CPI Houses
Banks Average loan Building Societies Average loan Other Lenders Average loan Percentage Change
fast facts Queensland was the only state or territory to record a decline in the average loan size over the year.
9
Consumer Price Index
March 2013
20 15
Table 8: QUEENSLAND June 2013
Long term average
35
Of the total number of first home buyers that purchased during the quarter, 13.4% were from Queensland. The number of loans to first home buyers increased 17.2% to 2,998 but decreased 41.4% when compared to the figure recorded last year. The average loan to first home buyers decreased 2.6% over the quarter and 0.9% compared to the June quarter of 2012, to $275,800. In Queensland, first home buyers make 10.6% of owner-occupier market. The total number of loans (excluding refinancing) increased 15.9% over the quarter and 11.6% compared to the June quarter of the previous year to 20,395. The average loan size dropped 1.5% over the quarter, to $296,348 – an identical change when compared to the June quarter of 2012.
Quarterly value
40
2003
Queensland
Chart 14
The proportion of income required to meet monthly loan repayments in South Australia during the June quarter was 29.5%. Housing affordability improved 1.1 percentage points over the quarter and 2.5 percentage points compared to the same time last year.
Long term average
35 30 25 20 15
Over the June quarter, the number of loans to first home buyers in South Australia increased 19.9%, to 1,838 – the increase of 28.0% compared to the same quarter of 2012. Of all first home buyers over the quarter, 8.2% were from South Australia. The average loan size to first home buyers decreased 0.9% during the quarter and increased 0.7% compared to the June quarter of 2012, to $240,133. The total number of loans rose 21.4% over the quarter and 16.0% compared to the June quarter of 2012, to 7,254. The average loan fell 1.6% over the quarter to $257,910. This is 2.0% higher than the figure last year.
Quarterly value
40
HLAI
10 5 Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-09
0 Jun-10
Over the quarter, the proportion of income required to meet rent payments declined 0.7 percentage points, to 24.9%. The figure was 0.9 percentage points lower than compared to the same quarter of 2012.
45
Dec-09
South Australia
Quarter
Chart 15 Rents and CPI for Adelaide from June 2003
Table 9: SOUTH AUSTRALIA June 2012
320
Home Loan Affordability Indicator (HLAI)
33.9
32.7
31.3
285
Average HLAI since March quarter 1980
$1,286
$1,291
$1,239
Average monthly loan repayment
$1,645
$1,712
$1,716
$257,910
$261,971
$252,749
Total number of loans (excl. refinancing)
7,254
5,973
6,256
Number of loans to first home buyers
1,838
1,533
1,436
Average first home buyer loan
$240,133
$242,200
$238,400
$263,758
$268,554
$268,939
n/a
n/a
n/a
n/a
n/a
n/a
Average loan
Banks Average loan
148 180 134
145 110
CPI
2013
Median weekly family income
215
2012
25.8%
2011
25.6%
2010
24.9%
2009
Proportion of family income devoted to meeting median rents
162
2008
32.0%
2007
30.6%
2006
29.5%
250
2005
40.7
176
2004
40.5
190
2003
40.5
Proportion of family income devoted to meeting average loan repayments
Rent $ per week
March 2013
Other dwellings
Houses
Building Societies Average loan Other Lenders Average loan Percentage Change
HLAI
CPI Adelaide
Since previous quarter
3.7%
0.2%
Since corresponding quarter last year
8.3%
2.1%
10
fast facts First home buyers make up 17.6% of home buyers in South Australia.
120
Consumer Price Index
June 2013
Housing Affordability Report
Chart 16
Housing affordability in Western Australia improved over the quarter with the proportion of family income required to meet home loan repayments decreasing 1.4 percentage points to 21.2%. When compared to the same time last year, it declined 2.1 percentage points.
Long term average
40 35 30 25 20 15 10
Western Australia recorded an increase in the number of loans to first home buyers over the June quarter, up 23.8% to 5,710. Compared to the June 2012 quarter, the figure rose 34.7% and this is the largest annual increase across the country. The average loan to first home buyers fell 0.9% over the quarter and increased 5.5% compared to the June quarter of last year, to $312,733. Of the total number of first home buyers that purchased in Australia during the June quarter, 25.4% were from Western Australia. Over the June quarter, the total number of loans (excluding refinancing) increased 20.5% to 16,575. This represents an increase of 25.3% compared to the same quarter of 2012. The average loan was recorded at $327,750 - 1.3% lower than the figure of the previous quarter and 5.6% higher than during the same time in 2012.
Quarterly value
45
HLAI
5 Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-09
0 Jun-10
Rental affordability improved over the quarter but worsened slightly compared to the same quarter of 2012. Over the June quarter, the proportion of income required to meet median rents decreased 0.5 percentage points, to 21.1%. When compared to the same quarter in 2012, the figure increased by 0.1 percentage points.
50
Dec-09
Western Australia
Quarter
Chart 17 Rents and CPI for Perth from June 2003 185
440 400
21.2%
22.6%
23.3%
Proportion of family income devoted to meeting median rents
21.1%
21.6%
21.0%
Median weekly family income
$2,275
$2,219
$2,092
200
129
160 120
$2,091
$2,169
$2,108
$327,750
$331,899
$310,503
Total number of loans (excl. refinancing)
16,575
13,750
13,229
CPI
Number of loans to first home buyers
5,710
4,611
4,239
Houses
Average first home buyer loan
$312,733
$315,600
$296,400
$329,313
$332,896
$315,723
n/a
n/a
n/a
n/a
n/a
n/a
Average loan
Banks Average loan Building Societies Average loan Other Lenders Average loan Percentage Change
HLAI
CPI Perth
Since previous quarter
6.5%
0.6%
Since corresponding quarter last year
9.8%
2.5%
2013
Proportion of family income devoted to meeting average loan repayments
143
240
2012
44.9
2011
44.9
2010
44.9
280
2009
Average HLAI since March quarter 1980
157
2008
43.0
2007
44.3
2006
47.2
320
2005
Home Loan Affordability Indicator (HLAI)
2004
June 2012
2003
March 2013
Rent $ per week
June 2013
Average monthly loan repayment
171
360
115
Other dwellings
fast facts Over the year, Western Australia recorded the largest increase in the number of loans to first home buyers across the country.
11
Consumer Price Index
Table 10: WESTERN AUSTRALIA
Chart 18
In Tasmania, the proportion of income required to meet home loan repayments fell 1.7 percentage points to 23.9% over the June quarter. Compared to the same quarter of 2012, housing affordability improved by 1.6 percentage points.
Long term average
40 30 20
The number of first home buyers in Tasmania increased by 18.6% over the quarter and 33.1% compared to the June quarter last year, to 414. The average loan to first home buyers decreased 1.2% over the quarter and 0.7% compared to the June quarter of 2012 to $208,233. During the quarter, first home buyers made up 17.7% of the owneroccupier market in Tasmania. The total number of new loans (excluding refinancing) increased 12.5% over the quarter, to 1,792. This represents a decline of 0.4% compared to the June quarter of 2012. The average loan size decreased 1.8% over the quarter and increased 6.6% compared to the same quarter of the previous year, to $223,133.
Quarterly value
50
HLAI
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Jun-09
0
Dec-10
10
Jun-10
Rental affordability improved over the quarter with the proportion of income required to meet median rent payments declining 0.7 percentage points to 24%. Compared to the June 2012 quarter, rental affordability improved by 1.7 percentage points.
60
Dec-09
Tasmania
Quarter
Chart 19 Rents and CPI for Hobart from June 2003
Table 11: TASMANIA March 2013
June 2012
Home Loan Affordability Indicator (HLAI)
41.9
39.0
39.2
Average HLAI since March quarter 1980
46.8
46.8
47.0
Proportion of family income devoted to meeting average loan repayments
23.9%
25.6%
25.5%
Proportion of family income devoted to meeting median rents
24.0%
24.7%
25.7%
Median weekly family income
$1,376
$1,338
$1,285
200
Average monthly loan repayment
$1,423
$1,485
$1,421
160
$223,133
$227,306
$209,257
120
$233,226
$235,837
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Hobart
Since previous quarter
7.4%
0.4%
Since corresponding quarter last year
6.9%
1.8%
2013
$230,130
Banks
Rent $ per week
CPI
2012
$209,733
2011
$210,867
2010
$208,233
2009
Average first home buyer loan
2008
311
129
2007
349
143
240
2006
414
157
280
2005
1,799
320
2004
1,593
171
360
2003
1,792
Number of loans to first home buyers
400
115
Other dwellings
Houses
Average loan Building Societies Average loan other Lenders Average loan Percentage Change
12
fast facts Over the quarter, Tasmania recorded the biggest decline in the amount of average monthly loan repayments across Australia.
Consumer Price Index
Average loan Total number of loans (excl. refinancing)
185
440
June 2013
Housing Affordability Report
Chart 20 Long term average
60 50 40 30 20 10
The number of first buyers’ loan commitments in the Northern Territory dropped 28.6% to 165 over the quarter and 24.0% compared to the same time last year. The average loan to first home buyers fell 6.6% over the June quarter and 11.5% compared to the same quarter of 2012 to $282,667. Of all owner-occupier housing finance commitments in the Territory, first home buyers made up 16.0% during the June quarter of 2013. The total number of loans (excluding refinancing) decreased 1.8% over the June quarter but increased 3.8% compared to the same quarter of last year, to 719. The average loan rose 8.4% over the quarter and 1.6% compared to the June quarter of 2012, to $351,811
Quarterly value
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-09
0 Jun-10
The Territory also recorded the smallest improvement in rental affordability across the country. The proportion of income required to meet median rents fell 0.4 percentage points to 26.6%. The figure is 3.0 percentage points higher compared to the June quarter of 2012.
70
Dec-09
Northern Territory was the only state or territory that recorded a decline in housing affordability. Over the June quarter, the proportion of income required to meet loan repayments increased 0.7 percentage points to 21%. Compared to the June 2012 quarter, housing affordability in the Northern Territory improved by 1.9 percentage points.
HLAI
Northern Territory
Quarter
Chart 21 Rents and CPI for Darwin from June 2003 600
175
550
Table 12: NORTHERN TERRITORY June 2012
Home Loan Affordability Indicator (HLAI)
47.7
49.1
43.7
Average HLAI since March quarter 1980
55.7
55.8
56.1
160 155
400
150
350
21.0%
Proportion of family income devoted to meeting median rents
26.6%
27.0%
23.6%
200
Median weekly family income
$2,468
$2,404
$2,368
150
Average monthly loan repayment
$2,244
$2,120
$2,351
22.9%
165
450
Proportion of family income devoted to meeting average loan repayments
20.3%
170
500 Rent $ per week
March 2013
145
300
140 135
250
$351,811
$324,441
$346,195
Total number of loans (excl. refinancing)
719
732
693
Number of loans to first home buyers
165
231
217
Average first home buyer loan
$282,667
$302,567
$319,467
$357,410
$345,722
$355,565
n/a
n/a
n/a
n/a
n/a
n/a
130
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
125 120
Other dwellings
CPI Houses
Banks Average loan Building Societies Average loan Other Lenders Average loan Percentage Change
HLAI
CPI Darwin
Since previous quarter
-2.9%
0.9%
Since corresponding quarter last year
9.2%
3.9%
fast facts Over the quarter, the Northern Territory was the only jurisdiction to record a decline in housing affordability.
13
Consumer Price Index
June 2013
Average loan
180
Australian Capital Territory
Chart 22
The proportion of income required to meet home loan repayments in the Australian Capital Territory decreased 0.9 percentage points over the quarter to 16.4%. The ACT remains the most affordable state or territory in which to buy a home and when compared to the June quarter of last year, housing affordability improved by 0.8 percentage points.
Long term average
58 56 54 52 50
The number of first home buyers in the Australian Capital Territory went up 7.9% to 396 during the quarter. This is 18.9% higher than the figure recorded during the June quarter of 2012. The average loan for first home buyers declined 3.1% over the quarter and 8.3% compared to the same time last year to $308,233. The total number of loans (excluding refinancing) increased 14.8% over the June quarter and decreased 3.5% compared to the same quarter of the previous year to 1,754. The average loan size increased 0.3% over the June quarter and 9.5% compared to the same quarter of 2012, to $345,083
Quarterly value
60
HLAI
48 Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Jun-09
46 Dec-09
The Australian Capital Territory recorded the largest improvement in rental affordability. The proportion of income required to meet median rent dropped 1.2 percentage points over the quarter and 1.5 percentage points compared to the June quarter of 2012, to 14.5%.
62
Quarter
Chart 23 Rents and CPI for Canberra from June 2003
Table 13: AUSTRALIAN CAPITAL TERRITORY
200
450
190
400
180
350
170
300
160
250
150
16.4%
17.3%
17.2%
Proportion of family income devoted to meeting median rents
14.5%
15.7%
16.0%
200
140
150
130
100
120
Median weekly family income
$3,099
$2,992
$2,879
Average monthly loan repayment
$2,201
$2,249
$2,140
$345,083
$344,118
$315,247
Average loan Total number of loans (excl. refinancing)
1,754
1,528
1,817
Number of loans to first home buyers
396
367
333
Average first home buyer loan
$308,233
$318,133
$336,100
$346,038
$349,923
$348,679
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Canberra
Since previous quarter
5.7%
0.6%
Since corresponding quarter last year
4.6%
2.2%
Banks Average loan
CPI
2013
Proportion of family income devoted to meeting average loan repayments
2012
58.4
2011
58.3
2010
58.3
2009
Average HLAI since March quarter 1987
2008
58.3
2007
57.7
2006
61.0
2005
Home Loan Affordability Indicator (HLAI)
2004
June 2012
2003
March 2013
Rent $ per week
June 2013
Other dwellings
Houses
Building Societies Average loan other Lenders Average loan Percentage Change
14
fast facts Australian Capital Territory remains the most affordable state or territory in which to buy a home.
Consumer Price Index
500
Real Estate Institute of Australia The Real Estate Institute of Australia is a federation of state and territory Real Estate Institutes. Formed in 1924, it represents the real estate industry in Australia at national and international levels. Adelaide Bank/REIA Housing Affordability Report is based on data from all major lending institutions. It is a comprehensive and accurate assessment of the ability of Australians to meet the cost of home purchase. Any differences between information contained in this report and previous editions of the Adelaide Bank/REIA Housing Affordability Report are due to revisions in the database that may be necessary from time to time. Home Loan Affordability Indicator: A ratio of family income to average loan payments. (An increase denotes easier affordability). The HLAI divided by a (constant) factor of 10 is the number of times by which median family income exceeds average home loan repayments in a full year. The reciprocal value of the HLAI is the proportion of family income that is required to repay the average home loan in a full year. Loans: Average size and total number for first home buyers and all borrowers (excluding refinancing) are average data over the quarter, based on all lender data from the ABS. Average Monthly Loan Repayment: Loan repayment figures are calculated from data provided by the ABS, Cannex Pollfax, and financial institutions across Australia. From the June quarter 2012, interest rates are calculated as weighted average interest rates for banks, building societies and other lenders. Median Weekly Family Income: A family is defined as a married couple with or without dependent children. The major part of family income is adult wages and salaries. Income data are sourced from ABS records, and updated on the basis of movements in average weekly earnings. Quarterly Median House Prices/ Quarterly Median Vacancy Rates: House price and vacancy data are taken from Bendigo Bank/REIA Real Estate Market Facts publication. Proportion of Family Income to Meet Rent Payments: The percentage of Median Weekly Family Income required to meet the median rent for a three bedroom house. Rents are obtained from Bendigo Bank/REIA Real Estate Market Facts publication.
Real Estate House 16 Thesiger Court, Deakin, ACT PO Box 234, Deakin West, ACT 2600 Phone: (02) 6282 4277 Fax: (02) 6285 2444 Website: www.reia.com.au Email: reia@reia.com.au
Adelaide Bank Adelaide Bank is a leading customer connected business, operating for more than 100 years. Adelaide Bank was established in January 1994, originating from the Co-operative Building Society of South Australia, which was Australia’s largest building society at that time. Adelaide Bank is now the dedicated intermediary lending business of Bendigo and Adelaide Bank Limited. We have a specialised focus on supporting intermediaries through continued product innovation and exceptional service levels. Adelaide Bank’s success is achieved by distributing mortgage products through partnerships with industry professionals. This offers our customers the freedom of choice when sourcing products that best meet their financial needs. Adelaide Bank Helpline within Australia: 1300 652 220 overseas: +61 8 8300 6000 www.adelaidebank.com.au All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by means of electronic, mechanical, photocopy, recording or otherwise, without the prior consent of the publishers.
© 2013 REAL ESTATE INSTITUTE OF AUSTRALIA ISSN: 1447 6606 Registered by Australia Post. Publication No. PP 299436/00045
15
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