The proportion of family income required to meet home loan repayments is calculated on the basis of median weekly family income, the average new home loan size (excluding refinancing), and the average variable interest rate over the September quarter.
Affordability was worse in every State and Territory except Tasmania, both over the quarter and over the year. Australia wide, affordability declined 2.2% over the quarter and 8.1% over the year.
‘As a result of the November 2007 interest rate rise, and possible rate rises to come, there is likely to be a further negative impact on home loan affordability in the December quarter,’ says Noel Dyett, REIA President.
‘Purchasing a home has never been more difficult in the past 22 years. The progressive decline in affordability and concerns about interest rate rises are reflected in the lower number of loans taken out in the September quarter compared with the previous quarter. The number of loans decreased in all States and Territories except the Northern Territory.
‘Whichever party is elected to Government this weekend must heed the danger signals inherent in an economy where people are increasingly stretched financially to meet housing costs.
‘There has recently been consideration by both major parties of initiatives on supply and demand to ease housing affordability, but these are longer term measures, like home savings schemes which won’t be accessible until 2012, and land release programs which can be expected to have long lead times before homes can be built. However, it appears that little is to be done to ease the immediate problems, which are getting worse,’ says Noel Dyett.