Housing Affordability Report
SEPTEMBER QUARTER 2013
Housing More Affordable but First Home Buyers Disappearing The Real Estate Institute of Australia has revised its methodology to estimate the median family income, in order to bring the median family income data in line with the Census. The September quarter 2013 Adelaide Bank/REIA Housing Affordability Report is the first report where new estimates have been used. Following the revision, significant changes are brought to the analysis, e.g. the level of affordability and the consistency of improvements. The September 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 29.8%. Compared to the same quarter of last year, the figure fell 3.5 percentage points. All states and territories recorded improvements in affordability over the quarter with the largest in Tasmania, where the proportion of income required to meet loan repayments dropped by 1.6 percentage points to 24.6%. The Australian Capital Territory remained the most affordable state or territory in which to buy a home while New South Wales remained the least affordable. Compared to the same quarter of last year, all states and territories recorded improvements in housing affordability. The ACT showed the most improvement while the Northern Territory’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 2.5%. The quarterly variable standard interest rate fell 0.3 percentage points, from 5.9% to 5.6%. The quarterly, three year fixed rate remained unchanged over the quarter at 5.1%. First home buyers made up 13.6% of the owner-occupier market compared to 14.6% in the previous quarter. The figure is one of the lowest since the Australian Bureau of Statistics started to collect data on the activity of first home buyers and is also persistently low compared to the long-run average of 19.9%, despite eight interest rate cuts since November 2011. The number of new finance commitments to first home buyers decreased 5.1% to 21,307 in the September quarter. Compared to the same quarter of 2012, new finance commitments to first home buyers fell 18.3%. Following changes to the First Home Owner Grant in Victoria, the state recorded the largest drop in the number of first home buyers, down by 13.8% over the September quarter. Falls were also recorded in Western Australia, Tasmania and the Northern Territory. Compared to the September quarter of 2012, the number of loans to first home buyers went down in New South Wales, Victoria, Queensland, the Northern Territory and the Australian Capital
Territory. The largest rise was in South Australia with the number of loans to first home buyers up by 27.3%. The average loan size to first home buyers fell 0.4% over the quarter and 0.6% compared to the same time last year, to $288,033. Over the quarter, New South Wales, Queensland and South Australia had decreases in the average loan size to first home buyers. The Northern Territory’s increase of 4.3% was the country’s largest. Compared to the September quarter of last year, the average loan size to first home buyers declined in most states. Western Australia and Tasmania were the only jurisdictions to record increases, up by 7.0% and 2.2% respectively. The total number of loans (excluding refinancing) increased 0.2% over the September quarter and 13.1% compared to the same quarter of 2012, to 104,016. With the exception of South Australia and Western Australia, all states and territories contributed to the quarterly rise. Compared to the September quarter of 2012, the Northern Territory was the only jurisdiction to show a decline in the number of loans, down by 2.7%. The largest rise was in South Australia, up by 18.2%. The average loan size remained unchanged over the quarter at $321,295. This is 0.2% higher than the figure of twelve months ago. During the September quarter, most states recorded drops in the average loan size. Victoria and the Northern Territory were the only jurisdictions to record increases, up by 1.3% and 1.0% respectively. Compared to the same quarter of 2012, the Northern Territory had the biggest rise in the average loan size while a drop of 4.1% in the Australian Capital Territory was the country’s largest.
Proportion of family income required to meet loan repayments & Median Weekly Family Income Median Weekly Family Income Australia wide
Proportion of family income required to pay loan
$1,541
$1,872 27.2%
29.8%
$1,525 27.6%
$1,841 25.4%
$2,445
$1,382
$1,519
26,5% 33.8% $1,488 30.9%
Repayments based on data for new borrowers.
Adelaide Bank/REIA Housing Affordability Report
$1,266 24.6%
19.8%
ACT
President’s Message September Quarter 2013 Welcome to the Adelaide Bank/REIA Housing Affordability Report. Having the best and most accurate information is important to everyone with an interest in property, particularly during this time of changing market conditions. This edition of the Adelaide Bank/ REIA Housing Affordability Report introduces some important changes, which will ensure that the report maintains its reputation as the most authoritative and credible overview of the state of housing affordability in Australia. The changes to estimating the median weekly family income and the rationale for these changes are outlined on the last page of this edition. REIA commissioned a research project that revised the methodology to estimate the median weekly family income and developed new methodology to bring the median family income data in line with the Census. REIA worked closely with Outlook Economics to ensure quality of the data. Given these changes, some of our previous findings have been adjusted. The September quarter of 2013 recorded an improvement in housing affordability, with the proportion of the median family
income required to meet average loan repayments dropping 1.2 percentage points to 29.8%. Increasing by 1.0% the median family income and decreasing the average loan repayment by 2.8%, resulted in housing affordability now being near its best in a decade. Record low interest rates resulted in the average loan repayment falling further during the third quarter of 2013. In Western Australia, Tasmania and the Northern Territory, it is cheaper to pay a mortgage rather than to rent a three bedroom house. Sadly, the lack of Government initiatives creates obstacles to entering the housing market. We have been talking a lot about the importance of upholding the availability of the First Home Owner Grant for purchasing established homes. As we expected, due to the changes introduced by the Victorian Government the number of loans to first home buyers in the state had the biggest quarterly drop across the country. Consequences of the availability of the grant to those only purchasing new dwellings is still pronounced in New South Wales and Queensland – the number of loans to first home buyers in these states is 46.7% and 34.5% lower than it was a year ago. Looking forward, we have moved on from the distraction of the Federal election and public and business sentiment are generally more positive. Here’s hoping for a continuation of that next year. Wishing you and yours the very best for the Christmas and New Year season. See you in 2014. Peter Bushby REIA President
Sponsor’s Message The continued improvement in housing affordability is a welcome result for aspiring home owners. Low interest rates, relatively stable average loan size and modest rises in family incomes have combined to maintain the trend of the last three years, offering more housing opportunities to more people. This is undeniably a good thing. Less pleasing and of genuine concern is the very low level of first home buyer activity over the most recent quarter. First home buyers remain a strong indicator of the underlying health of the Australian housing market and their absence over recent months suggests the headline numbers may not reflect the thinking of those Australians yet to enter the market. It is a reminder that, though affordability is improving, it needs to improve further.
2
Improving housing affordability must remain the focus of governments and industry participants. At Adelaide Bank, we understand that the best way a bank can contribute to improving housing affordability is to keep the cost of lending as low as possible. We also believe in the value of good advice which is why we partner with Australia’s growing network of professional mortgage brokers to offer great value home loans to assist people into housing as cheaply as we can and with as little stress as possible. Please come and pay us a visit at www.adelaidebank.com.au to see how we can help you or someone you know to realise the dream of owning their own home sooner. Damian Percy General Manager Adelaide Bank
Housing Affordability Report
Proportion of family income required to meet loan repayments
Rental affordability 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 September 1997.
Over the September quarter of 2013, rental affordability worsened slightly with the proportion of income required to meet rent payments increasing 0.1 percentage point to 25.6%. Compared to the same quarter of 2012, the proportion remained unchanged.
Chart 1 Proportion of family income required to meet average loan repayments - Australia
% 40
Over the quarter, South Australia, Western Australia, Tasmania and the ACT recorded improvements in rental affordability. Tasmania recorded the biggest improvement with the proportion of median income required to meet the average rent falling 0.8 percentage points.
38 36 34
Following the revision of the median family income, the Northern Territory is the least affordable state or territory in Australia in which to rent a property. The territory’s proportion of income required to meet rent repayments is 35.8% – 10.2 percentage points higher than the national level. The Australian Capital Territory remained the most affordable state or territory in which to rent a property with 18.4% of family income required to meet rent payments.
32 30 28 26 24 22 Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
Sep-99
Sep-98
Sep-97
20
Chart 2 Proportion of Median Weekly Family Income Spent on Rent
% 27 26 25 24
Table 1: P roportion of family income needed to meet loan repayments
23
WA
25.4%
26.5%
27.9%
TAS
24.6%
26.2%
27.6%
NT
27.2%
28.0%
29.2%
ACT
19.8%
21.1%
23.5%
AUS
29.8%
31.0%
33.3%
fast facts Proportion of family income required to meet: September 2013
June 2013
September 2012
Home loan repayments
29.8%
31.0%
33.3%
Rent payments
25.6%
25.5%
25.6%
3
Sep-13
Sep-12
30.3%
Sep-11
31.6%
27.8%
Sep-10
28.9%
26.5%
Sep-09
27.6%
SA
Sep-08
QLD
20 Sep-07
34.3%
Sep-06
31.6%
Sep-05
30.9%
Sep-04
VIC
21
Sep-03
37.0%
Sep-02
35.2%
Sep-01
33.8%
Sep-00
NSW
22
Sep-99
Sep qtr 2012
Sep-98
Jun qtr 2013
Sep-97
Sep qtr 2013
Factors Influencing Home Loan Affordability
Table 2: P roportion of family income needed to meet rent payments Sep qtr 2013
Jun qtr 2013
Sep qtr 2012
NSW
28.3%
27.9%
28.1%
VIC
23.2%
23.0%
23.1%
QLD
23.9%
23.9%
24.3%
SA
23.2%
23.4%
23.7%
WA
25.8%
26.4%
25.3%
TAS
25.5%
26.3%
25.9%
NT
35.8%
35.4%
32.8%
ACT
18.4%
18.7%
19.5%
AUS
25.6%
25.5%
25.6%
• The ability to repay the mortgage depends upon the family income. Chart 4 shows the relationship between the Australian weighted average median house price, median weekly family income and average loan size.
Chart 4 House prices and income
If refinancing is excluded, the number of first home buyers as a proportion of the owner-occupier market fell 1.1 percentage points over the quarter and 7.9 percentage points compared to the figure last year, to 20.5%. This is one of the lowest figures recorded since 1991. First home buyers’ share of all dwellings financed and the average size of their loans from the September quarter 2004 to the September quarter 2013 is shown in Chart 3.
Chart 3
Percentage (refinancing exlcuded), %
Average Loan Size, $'000
45 40
300
35 250
30 25
200
20 150
15
Sep-13
Mar-13
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
Sep-04
Mar-05
10
4
550 500
1450
450 400
1300
350 300
1150
2008
2009
2010
Med Wtd Ave Price
2011
2012
1000 Sep
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
Mar
Dec
Sep
Jun
200
June
250
2013
Med Weekly Family Income
Ave Loan Size
Median House Prices The Australian median house price rose by 3.0% over the September quarter, to $562,503 – an increase of 9.5% compared to the same time last year.
First Home Buyers' Share of All Dwellings Financed Percentage, %
1600
Mar
First home buyers made up 13.6% of the owner-occupier market compared to 14.6% in the previous quarter. The figure is one of the lowest since the Australian Bureau of Statistics started to collect data on the activity of first home buyers. The figure also remains persistently low compared to the long-run average proportion of 19.9% despite eight interest rate cuts since November 2011.
$
Dec
The average loan size to first home buyers fell 0.4% over the quarter and 0.6% compared to the September quarter of the previous year, to $288,033.
$’000 600
Sep
The number of new finance commitments to first home buyers decreased 5.1% to 21,307 in the September quarter. Compared to the same quarter of 2012, that’s a fall of 18.3%.
100
• 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.
First Home Buyers
350
A range of factors influence home loan affordability:
Sydney, Melbourne, Brisbane, and Hobart contributed to the quarterly rise while Adelaide, Perth, Canberra and Darwin had falls. The median house price increased the most in Melbourne, up by 7.3% and Perth’s decline of 3.8% was the biggest of the capitals. When compared to the September quarter of last year, all capital cities had increases in the median house price. Strong auction results translated into Melbourne and Sydney having the biggest jumps over the year, up by 15.0% and 11.7% respectively. Detailed data on median prices for houses and other dwellings is available in the Bendigo Bank/REIA Real Estate Market Facts publication.
Housing Affordability Report
Average Loan (All Borrowers)
7,5 6,5 5,5 4,5 3,5
Av. Var Rate
Jun-13
Sep-13
Mar-13
Dec-12
Jun-12
RBA Cash Rate
Sep-12
Dec-11
Mar-12
Jun-11
Sep-11
Mar-11
Jun-10
Sep-10 Dec-10
Mar-10
Dec-09
2,5 Jun-09
The proportion of family income required to meet loan repayments decreased to 29.8%, down from 31.0% in the previous quarter. When compared to the same time last year, it’s a 3.5 percentage points drop.
8,5
Sep-09
Over the quarter, average monthly home loan repayments went down 2.8% to $1,993, underpinned by drops in interest rates. Compared to twelve months earlier, average monthly loan repayments fell by 8.4%.
% 9,5
Mar-09
The national median weekly family income rose 1.0% to $1,541 during the September quarter 2013. This represents a 2.1% increase when compared to the same time last year.
Quarterly interest rates
Sep-08
The Real Estate Institute of Australia has revised its methodology to estimate the median family income in order to bring the median family income data in line with the Census. The September quarter of 2013 (this edition) Adelaide Bank/REIA Housing Affordability Report is the first report where new estimates have been used.
Chart 5
Dec-08
Median Family Income and Average Monthly Loan Repayments
Av 3yr Fixed Rate
The total number of new lending commitments (excluding refinancing) issued nationally over the September quarter increased 0.2%, to 104,016. This represents an increase of 13.1% compared to the same quarter of 2012. The average loan size of new lending commitments (excluding refinancing) remained unchanged over the last quarter and increased 0.2% compared to the September quarter of 2012, to $321,295.
Interest Rates During the September quarter, the Reserve Bank of Australia (RBA) cut the cash rate to the historically low level of 2.5%. The gap between variable and three year fixed rates is now 0.5 percentage points. The quarterly average variable standard interest rate declined 0.3 percentage points, from 5.9% to 5.6%. This represents a decrease of 1.0 percentage point compared to the September quarter of 2012. The quarterly average, three year fixed rate remained unchanged over the quarter and decreased 0.6 percentage points compared to the September quarter 2012, to 5.1%.
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 September 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 the September quarter 1997 is shown in Chart 6.
Table 3: Home Loan Affordability Indicators
Average quarterly variable interest rates were: Banks—5.6%, decrease of 0.3 percentage points over the September quarter. Permanent Building Societies—5.5%, a decline of 0.2 percentage points from the previous quarter. Other lenders—5.0%, a drop of 0.3 percentage points from the first quarter of 2013. The average fixed (3 year) interest rates were: Banks—5.1%, unchanged compared to the previous quarter. Permanent Building Societies—5.0%, a drop of 0.2 percentage points from the June quarter.
Sep qtr 2013
Jun qtr 2013
Sep qtr 2012
NSW
29.6
28.4
27.0
VIC
32.4
31.6
29.1
QLD
36.2
34.6
31.6
SA
37.7
36.0
33.1
WA
39.4
37.7
35.8
TAS
40.7
38.2
36.2
NT
36.8
35.8
34.3
ACT
50.5
47.5
42.5
AUS
33.5
32.3
30.0
Other lenders—5.0%, a decrease of 0.1 percentage points from the previous quarter. 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: Sep’13—Jun’13
% Change: Sep’13—Sep’12
NSW
4.2
9.6
VIC
2.5
11.3
QLD
4.6
14.6
SA
4.7
13.9
WA
4.5
10.1
TAS
6.5
12.4
NT
2.8
7.3
ACT
6.3
18.8
AUS
3.7
11.7
Table 5: AUSTRALIA
Chart 6 Home loan affordability indicator over time HLAI 45
Sep qtr 2013
Jun qtr 2013
Sep qtr 2012
Home Loan Affordability Indicator (HLAI)
33.5
32.3
30.0
Average HLAI since December quarter 1996
33.5
33.5
33.6
Proportion of family income devoted to meeting average loan repayments
29.8%
31.0%
33.3%
Proportion of family income devoted to meeting median rents
25.6%
25.5%
25.6%
Median weekly family income
$1,541
$1,526
$1,509
$1,993
$2,050
$2,176
Average loan
Average monthly loan repayment
$321,295
$321,413
$320,542
35
Total number of loans (excl refinancing)
104,016
103,826
91,959
30
Number of loans to first home buyers
21,307
22,459
26,072
Average first home buyer loan
$288,033
$289,167
$289,767
$326,318
$325,732
$325,335
40
Banks
25
Average loan
Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
Sep-99
Sep-98
Sep-97
20
Standard variable interest rate
5.6%
5.9%
6.6%
Fixed interest rate
5.1%
5.1%
5.7%
$255,658
$254,162
$262,087
Standard variable interest rate
5.5%
5.7%
6.4%
Fixed interest rate
5.0%
5.2%
5.8%
Building Societies Average loan
Chart 7
Other Lenders
Australian Rent and CPI from September Quarter 1997
Average loan
400
200 190 180
300
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
5.8%
CPI
11.7%
2.2%
100
6
5.1%
HLAI
1.2%
110
CPI
5.0%
3.7%
120
Weighted Median Rent
Fixed interest rate Percentage Change Since previous quarter
130
150
6.1%
Since corresponding quarter last year
140
200
$262,844
5.3%
160 150
250
$274,021
5.0%
170 CPI
Rent $
350
$265,090
Standard variable interest rate
Housing Affordability Report
Chart 8
25 20 15 10 5
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
500
200 190
450 Rent $ per week
Home Loan Affordability Indicator (HLAI)
29.6
28.4
27.0
Average HLAI since December quarter 1996
29.6
29.6
29.7
Proportion of family income devoted to meeting average loan repayments
33.8%
35.2%
37.0%
250
Proportion of family income devoted to meeting median rents
28.3%
27.9%
28.1%
200
Median weekly family income
$1,519
$1,506
$1,496
Average monthly loan repayment
$2,226
$2,298
$2,401
170
350
160 150
300
140
$358,843
$360,278
$353,674
Total number of loans (excl. refinancing)
28,619
28,262
25,283
Number of loans to first home buyers
3,338
3,207
6,262
Average first home buyer loan
$300,033
$309,100
$307,667
$367,778
$369,092
$362,858
$258,311
$254,823
$262,796
$282,499
$289,222
$282,273
HLAI
CPI Sydney
Since previous quarter
4.2%
1.2%
Since corresponding quarter last year
9.6%
2.1%
Banks
Building Societies
Other Lenders
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
130 120
Other dwellings
CPI Houses
fast facts New South Wales remains the least affordable state or territory in which to buy a home.
7
Consumer Price Index
400
Sep qtr 2012
Average loan
Mar-11
Rents and CPI for Sydney from September 2003
Jun qtr 2013
Percentage Change
Dec-10
Chart 9
Sep qtr 2013
Average loan
Sep-10
Quarter
180
Table 6: NEW SOUTH WALES
Average loan
Jun-10
0
The total number of loans issued (excluding refinancing) increased 1.3% over the quarter and 13.2% compared to the September quarter of last year to 28,619. The average loan size decreased 0.4% over the quarter but increased 1.5% compared to twelve months earlier, to $358,843.
Average loan
Long term average
30
Mar-10
Of the total number of first home buyers that purchased during the September quarter, 15.7% were from New South Wales. Over the quarter, the number of loans to first home buyers increased by 4.1% to 3,338 but when compared to the figure a year ago, loans to first home buyers decreased by 46.7%. This is the biggest annual drop in the number of first home buyers’ commitments across the country. The average loan to first home buyers fell 2.9% over the quarter and 2.5% compared to the September quarter of 2012, to $300,033.
Quarterly value
35
Dec-09
Over the September quarter, New South Wales’ rental affordability worsened. The proportion of income required to meet median rent payments increased 0.4 percentage points over the quarter and 0.2 percentage points compared to the September quarter of 2012, to 28.3%, making it the second most expensive jurisdiction in which to rent.
40
Sep-09
Housing affordability in New South Wales improved over the quarter, with the proportion of income required to meet loan repayments falling 1.4 percentage points to 33.8%, a drop of 3.2 percentage points compared to the September quarter of last year. Despite the fall, with the proportion of income required to meet loan repayments 4.0% 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
Chart 10
Over the quarter, Victoria recorded an improvement in housing affordability, with the proportion of income required to meet loan repayments falling 0.7 percentage points, to 30.9%. Compared to the figure last year, the proportion fell 3.4 percentage points.
40
Rental affordability worsened slightly with the proportion of income required to meet the median rent rising 0.2 percentage points over the quarter and 0.1 percentage point compared to the September quarter of 2012, to 23.2%.
25 HLAI
30
10
Home Loan Affordability Indicator (HLAI)
32.4
31.6
29.1
Average HLAI since December quarter 1996
34.3
34.3
34.5
Sep-13
Mar-13
Sep-12
Mar-12
Sep-10
Sep-09
Quarter
Chart 11 Rents and CPI for Melbourne from September 2003 360
195
340
185
320 Rent $ per week
Sep qtr 2012
Sep-11
0
Mar-11
5
175
300 280
165
260
155
240
145
Proportion of family income devoted to meeting average loan repayments
30.9%
31.6%
34.3%
Proportion of family income devoted to meeting median rents
23.2%
23.0%
23.1%
200
Median weekly family income
$1,488
$1,476
$1,473
180
125
Average monthly loan repayment
$1,991
$2,022
$2,191
160
115
$283,833
$283,833
$286,500
$323,767
$318,748
$323,718
n/a
$263,054
$291,340
$257,786
$267,813
$290,229
2013
Average first home buyer loan
CPI
2012
7,740
2011
7,727
2010
6,659
2009
24,510
2008
27,075
2007
27,334
Number of loans to first home buyers
2006
$322,645
2005
$317,023
2004
Average loan
135
2003
$321,083
Total number of loans (excl. refinancing)
220
Consumer Price Index
Jun qtr 2013
20 15
Table 7: VICTORIA Sep qtr 2013
Long term average
35
The total number of loans (excluding refinancing) increased during the September quarter by 1.0% to 27,334 and when compared to the same time last year, the total number of loans rose 11.5%. The average loan size increased 1.3% over the quarter but fell 0.5% compared to the same time last year, to $321,083. Following the changes to the First Home Owner Grant in Victoria, the state recorded the largest drop in the number of first home buyers, down by 13.8% over the September quarter. Compared to the same time last year, the figure fell by 14.0%. The average loan to first home buyers remained unchanged over the quarter while declining 0.9% compared to the September quarter of 2012. Of the total number of first home buyers that purchased in Australia during the third quarter of the year, 31.3% were from Victoria.
Quarterly value
Mar-10
Victoria
Other dwellings
Houses
Banks Average loan Building Societies Average loan Other Lenders Average loan Percentage Change
HLAI
CPI Melb
Since previous quarter
2.5%
1.4%
Since corresponding quarter last year
11.3%
2.4%
8
fast facts Over the quarter, Victoria recorded the largest drop in the number of loans to first home buyers across the country.
Housing Affordability Report
Chart 12
Queensland recorded an improvement in housing affordability. The proportion of income required to meet home loan repayments decreased 1.3 percentage points during the September quarter, to 27.6%, a drop of 4.0 percentage points compared to the same time last year.
25
10
28.9%
31.6%
Proportion of family income devoted to meeting median rents
23.9%
23.9%
24.3%
Median weekly family income
$1,525
$1,509
$1,484
Average monthly loan repayment
$1,826
$1,890
$2,033
$294,423
$296,348
$299,501
Total number of loans (excl. refinancing)
21,302
20,395
18,486
Number of loans to first home buyers
3,300
2,994
5,038
Average first home buyer loan
$273,333
$275,933
$280,533
$296,501
$298,095
$301,046
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Brisbane
Since previous quarter
4.6%
1.3%
Since corresponding quarter last year
14.6%
2.2%
Average loan
Banks Average loan
Sep-13
Mar-13
Sep-12
240
148
190
134
140
120
2013
27.6%
162
2012
Proportion of family income devoted to meeting average loan repayments
290
2011
34.1
2010
34.1
176
2009
34.1
340
2008
Average HLAI since December quarter 1996
190
2007
31.6
390
2006
34.6
Mar-12
Rents and CPI for Brisbane from September 2003
2005
36.2
Sep-11
Chart 13
2004
Home Loan Affordability Indicator (HLAI)
Sep-10
Sep-09
Quarter
Rent $ per week
Sep qtr 2012
Mar-10
0
Mar-11
5
Other dwellings
CPI Houses
Building Societies Average loan Other Lenders Average loan Percentage Change
fast facts Over the quarter, Queensland had the biggest rise in the number of first home buyers across the country.
9
Consumer Price Index
Jun qtr 2013
20 15
Table 8: QUEENSLAND Sep qtr 2013
Long term average
30
While Queensland recorded the largest quarterly increase in the number of loans to first home buyers - up by 10.2% to 3,300 compared to the September quarter of 2012, the figure dropped 34.5%. Of the total number of first home buyers that purchased during the quarter, 15.5% were from Queensland. The average loan to first home buyers decreased 0.9% over the quarter and 2.6% compared to the September quarter of 2012, to $273,333. The total number of loans (excluding refinancing) increased 4.4% over the quarter and 15.2% compared to the September quarter of last year, to 21,302. The average loan size dropped 0.6% over the quarter, to $294,423, a decrease of 1.7% compared to the figure last year.
Quarterly value
35
HLAI
During the quarter, rental affordability in Queensland remained unchanged. Compared to the September quarter of 2012, the proportion of income required to meet median rents dropped 0.4 percentage points, to 23.9%.
40
2003
Queensland
Chart 14
South Australia recorded the third largest quarterly improvement in housing affordability across the country. The proportion of income required to meet monthly loan repayments dropped 1.3 percentage points over the quarter and 3.8 percentage points compared to the same time last year, to 26.5%.
30 25 20 15 10
Proportion of family income devoted to meeting median rents
23.2%
23.4%
23.7%
Median weekly family income
$1,382
$1,365
$1,352
$1,589
$1,645
$1,772
$256,219
$257,910
$261,053
6,940
7,254
5,873
Number of loans to first home buyers
1,852
1,843
1,455
Average first home buyer loan
$235,533
$239,700
$246,367
162 215 148 180 134
145 110
CPI
Banks $263,928
$263,758
$273,471
n/a
n/a
n/a
n/a
Other dwellings
Houses
Building Societies Average loan Other Lenders Average loan
n/a
n/a
HLAI
CPI Adelaide
Since previous quarter
4.7%
1.4%
Since corresponding quarter last year
13.9%
2.0%
Percentage Change
10
Sep-13
Mar-13
Sep-12
250
fast facts Over the year, South Australia recorded the biggest increase in the number of loans, excluding refinancing.
2013
30.3%
2012
27.8%
2011
26.5%
176
2010
Proportion of family income devoted to meeting average loan repayments
285
2009
40.3
2008
40.0
2007
40.0
2006
33.1
2005
36.0
2004
37.7
Average HLAI since December quarter 1996
190
320
2003
Home Loan Affordability Indicator (HLAI)
Rent $ per week
Sep qtr 2012
Average loan
Mar-12
Chart 15
120
Consumer Price Index
Jun qtr 2013
Total number of loans (excl. refinancing)
Sep-10
Sep-09
Quarter
Rents and CPI for Adelaide from September 2003 Sep qtr 2013
Average monthly loan repayment
Sep-11
0
Mar-11
5
Table 9: SOUTH AUSTRALIA
Average loan
Long term average
35
Over the September quarter, the number of loans to first home buyers in South Australia increased 0.5%, to 1,852. Compared to the same time last year, the state recorded the biggest increase across the country, up by 27.3%. Of all first home buyers over the quarter, 8.7% were from South Australia and the average loan size to first home buyers decreased 1.7% during the quarter and 4.4% compared to the September quarter of 2012, to $235,533. The total number of loans dropped 4.3% over the quarter, to 6,940. Compared to the September quarter of last year, the figure went up by 18.2%. The average loan fell 0.7% over the quarter, to $256,219, 1.9% lower than the figure of last year.
Quarterly value
40
HLAI
Over the quarter, the proportion of income required to meet rent payments fell 0.2%, to 23.2%, which was 0.5 percentage points lower than compared to the same quarter of 2012.
45
Mar-10
South Australia
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 1.1 percentage points to 25.4%, 2.5 percentage points lower than the same time last year.
30
10
26.5%
27.9%
Proportion of family income devoted to meeting median rents
25.8%
26.4%
25.3%
Median weekly family income
$1,841
$1,820
$1,780
Average monthly loan repayment
$2,028
$2,091
$2,153
$326,940
$327,750
$317,133
Total number of loans (excl. refinancing)
Average loan
15,322
16,575
13,708
Number of loans to first home buyers
5,229
5,713
4,604
Average first home buyer loan
$317,000
$312,933
$296,300
Banks Average loan
Sep-13
Mar-13
Sep-12
155 270
145
220
135
170
125
120
115
2013
25.4%
165
320
2012
Proportion of family income devoted to meeting average loan repayments
175
370
2011
38.7
185
2010
38.6
420
2009
38.6
195
2008
Average HLAI since December quarter 1996
470
2007
35.8
Mar-12
Rents and CPI for Perth from September 2003
2006
37.7
Sep-11
Chart 17
2005
39.4
Sep-10
Sep-09
Quarter
2004
Home Loan Affordability Indicator (HLAI)
Mar-10
0
Mar-11
5
Rent $ per week
Sep qtr 2012
20
Other dwellings
CPI Houses
$329,461
$329,313
$318,330
n/a
n/a
n/a
n/a
Building Societies Average loan Other Lenders Average loan
n/a
n/a
HLAI
CPI Perth
Since previous quarter
4.5%
1.2%
Since corresponding quarter last year
10.1%
2.6%
Percentage Change
fast facts Of the total numbers of first home buyers in the country, 24.5% were from Western Australia.
11
Consumer Price Index
Jun qtr 2013
25
15
Table 10: WESTERN AUSTRALIA Sep qtr 2013
Long term average
35
Western Australia recorded an 8.5% decrease in the number of loans to first home buyers over the September quarter, to 5,229. Compared to the same quarter of 2012, the figure rose 13.6% and this is the second largest annual increase across the country. The average loan to first home buyers increased 1.3% over the quarter and 7.0% compared to the same time last year, to $317,000. Of the total number of first home buyers that purchased in Australia during the September quarter, 24.5% were from Western Australia. Over the September quarter, the total number of loans (excluding refinancing) fell 7.6% to 15,322. This represents an increase of 11.8% compared to twelve months earlier. The average loan was recorded at $326,940, 0.2% lower than the figure of the previous quarter and 3.1% higher than the same time in 2012.
Quarterly value
40
HLAI
Over the September quarter, the proportion of income required to meet median rents decreased 0.6 percentage points, to 25.8%. When compared to the same quarter in 2012, the figure increased by 0.5 percentage points.
45
2003
Western Australia
Chart 18
In Tasmania, the proportion of income required to meet home loan repayments fell 1.6 percentage points to 24.6% over the September quarter – the largest improvement across the nation. Compared to the same quarter of 2012, housing affordability improved by 3.0 percentage points.
35 30 25 20 15 10
Proportion of family income devoted to meeting median rents
25.5%
26.3%
25.9%
Median weekly family income
$1,266
$1,253
$1,234
Average monthly loan repayment
$1,349
$1,423
$1,476
$217,549
$223,133
$217,404
1,830
1,792
1,672
Number of loans to first home buyers
380
413
338
Average first home buyer loan
$209,033
$208,367
$204,600
$221,739
$230,130
$222,570
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Hobart
Since previous quarter
6.5%
0.9%
Since corresponding quarter last year
12.4%
2.0%
Banks
Sep-13
Mar-13
300
160
250
150
200
140
150
130
100
120
CPI
Building Societies
2013
27.6%
2012
26.2%
2011
24.6%
170
2010
Proportion of family income devoted to meeting average loan repayments
350
2009
42.8
2008
42.6
2007
42.5
2006
36.2
2005
38.2
180
2004
40.7
Average HLAI since December quarter 1996
400
2003
Home Loan Affordability Indicator (HLAI)
Rent $ per week
Sep qtr 2012
Average loan
Sep-12
Chart 19
Other dwellings
Houses
other Lenders Average loan Percentage Change
12
fast facts Over the quarter, Tasmania recorded the largest improvement in housing affordability across the country.
Consumer Price Index
Jun qtr 2013
Average loan
Mar-12
Sep-10
Sep-09
Quarter
Rents and CPI for Hobart from September 2003 Sep qtr 2013
Total number of loans (excl. refinancing)
Sep-11
0
Mar-11
5
Table 11: TASMANIA
Average loan
Long term average
40
The number of first home buyers in Tasmania decreased by 8.0% over the quarter but increased 12.4% compared to twelve months earlier, to 380. The average loan to first home buyers increased 0.3% over the quarter and 2.2% compared to the September quarter of 2012 to $209,033. The total number of new loans (excluding refinancing) increased 2.1% over the quarter and 9.4% compared to the September quarter of 2012, to 1,830. The average loan size decreased 2.5% over the quarter, to $217,549, an increase of 0.1% compared to the same time last year.
Quarterly value
45
HLAI
Rental affordability improved over the quarter with the proportion of income required to meet median rent payments falling 0.8 percentage points to 25.5%. Compared to the September 2012 quarter, that’s a 0.4 percentage points drop.
50
Mar-10
Tasmania
Housing Affordability Report
Chart 20
The Northern Territory recorded an improvement in housing affordability with the proportion of income required to meet loan repayments falling 0.8 percentage points over the quarter and 2.0 percentage points compared to the same quarter of 2012, to 27.2%.
Long term average
40 35 30 25 20 15 10
Sep-13
Mar-13
Sep-12
Mar-12
Sep-10
Sep-09
Sep-11
0
Mar-11
5
The number of first home buyers’ loan commitments in the Northern Territory dropped 9.7% to 149 over the quarter and 28.7% compared to the same time last year. The average loan to first home buyers went up 4.3% during the September quarter, showing a 12.4% drop compared to the same quarter of 2012. The total number of loans (excluding refinancing) increased 3.5% over the September quarter but declined 2.7% compared to the same time last year, to 744. The average loan rose 1.0% over the quarter and 4.8% compared to twelve months ago, to $355,398.
Quarterly value
45
HLAI
Already the worst in the country, rental affordability in the Northern Territory deteriorated further with the proportion of income required to meet the median rent increasing 0.4 percentage points over the quarter and 3.0% compared to the September quarter of 2012, to 35.8%. This figure is 10.2 percentage points higher than the national level.
50
Mar-10
Northern Territory
Quarter
Chart 21 Rents and CPI for Darwin from September 2003
Table 12: NORTHERN TERRITORY Jun qtr 2013
Sep qtr 2012
Home Loan Affordability Indicator (HLAI)
36.8
35.8
34.3
Average HLAI since December quarter 1996
42.7
42.8
43.1
Proportion of family income devoted to meeting average loan repayments
27.2%
28.0%
29.2%
Proportion of family income devoted to meeting median rents
35.8%
35.4%
32.8%
Median weekly family income
$1,872
$1,853
$1,821
Average monthly loan repayment
$2,204
$2,244
$2,303
220
$355,398
$351,811
$339,205
160
130
744
719
765
100
120
340
150
280
$360,316
$357,410
$359,776
n/a
n/a
n/a
n/a
2013
2012
2011
140
2010
Rent $ per week
160
Other dwellings
CPI
Banks Average loan
400
2009
$336,333
170
2008
209
$282,667
460
2007
165
$294,700
180
520
2006
149
Average first home buyer loan
190
580
2005
Number of loans to first home buyers
640
2004
Total number of loans (excl. refinancing)
200
2003
Average loan
700
Houses
Building Societies Average loan Other Lenders Average loan
n/a
n/a
HLAI
CPI Darwin
Since previous quarter
2.8%
0.9%
Since corresponding quarter last year
7.3%
3.4%
Percentage Change
fast facts The Northern Territory is the least affordable state or territory in which to rent.
13
Consumer Price Index
Sep qtr 2013
Australian Capital Territory
52
Long term average
50 48 46 44 42
The number of first home buyers in the ACT went up 0.8% to 400 during the quarter. This is 6.1% lower than the figure of the September quarter of 2012. The average loan for first home buyers increased 2.8% over the quarter but declined 1.8% compared to the same time last year, to $316,000. The total number of loans (excluding refinancing) increased 9.7% over the September quarter and decreased 15.8% compared to the same quarter of last year, to 1,925. The average loan size fell 1.9% over the quarter and by 4.1% compared to the September quarter of 2012, to $338,567.
Quarterly value
Sep-13
Mar-13
Sep-12
Mar-12
Sep-10
Sep-09
Sep-11
38
Mar-11
40 Mar-10
The ACT recorded an improvement in rental affordability with the proportion of income required to meet median rent dropping 0.3 percentage points over the quarter and 1.1 percentage points compared to the same time last year, to 18.4%.
Chart 22
HLAI
The Australian Capital Territory recorded the second largest improvement in housing affordability across the country over the September quarter. The proportion of income required to meet home loan repayments fell 1.3 percentage points to 19.8%. The ACT remains the most affordable state or territory in which to buy a home and when compared to the September quarter of last year, housing affordability improved by 3.7 percentage points.
Quarter
Chart 23 Rents and CPI for Canberra from September 2003
Table 13: AUSTRALIAN CAPITAL TERRITORY Sep qtr 2012
450
190
Home Loan Affordability Indicator (HLAI)
50.5
47.5
42.5
400
180
Average HLAI since December quarter 1996
350
170
300
160
250
150
200
140
Rent $ per week
200
Jun qtr 2013
$2,445
$2,412
$2,354
Average monthly loan repayment
$2,100
$2,201
$2,397
150
130
$338,567
$345,083
$353,060
100
120
Average loan Total number of loans (excl. refinancing)
1,925
1,754
1,662
Number of loans to first home buyers
400
397
426
Average first home buyer loan
$316,000
$307,467
$321,933
$340,387
$346,038
$357,115
n/a
n/a
n/a
n/a
n/a
n/a
HLAI
CPI Canberra
Since previous quarter
6.3%
0.6%
Since corresponding quarter last year
18.8%
1.7%
Banks
CPI
2013
Median weekly family income
2012
19.5%
2011
18.7%
2010
18.4%
2009
Proportion of family income devoted to meeting median rents
2008
23.5%
2007
21.1%
2006
19.8%
2005
48.2
2004
48.1
2003
48.1
Proportion of family income devoted to meeting average loan repayments
Other dwellings
Houses
Average loan 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
Sep qtr 2013
income is adult wages and salaries. Income data are sourced from ABS records, and updated on the basis of movements in household income data from quarterly national accounts and average weekly earnings and wage price index.
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. In the September 2013 quarter edition of the Adelaide Bank/REIA Housing Affordability Report, REIA introduces new procedures for estimating the median weekly family income. Estimates have been revised for Australia as well as for states and territories in consultation with Outlook Economics – an Australian based economic consultancy that specialises in economic modelling, policy analysis and forecasting. Following the delivery of findings from the latest Census, significant discrepancies between the REIA data and the Census data were discovered for South Australia, Western Australia, the Northern Territory and the Australian Capital Territory. Despite the results of the previous methodology being satisfactory at a national level as well as for New South Wales, Victoria, Queensland and Tasmania, discrepancies for the other states and territories identified a need to revise the methodology in estimating the median weekly family income. In October 2013, REIA commissioned Outlook Economics to revise the methodology to estimate the median weekly family income to bring it in line with the Census. The updated methodology uses quarterly national accounts data on household income to update and interpolate median family income at the national level, and then relative wage data to disaggregate the national series to the state and territory level. These form the first two stages of the estimation. The third stage is to make a preliminary update of the estimate for the latest quarter using information from the labour price index. 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. 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
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 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. Address: 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
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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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