Australia just doesn’t have enough homes to buy or rent and it is causing affordability issues, the Real Estate Institute of Australia (REIA) said this week.
Launching REIA’s latest Housing Affordability Report, President Hayden Groves said that the results for the June quarter show that lack of supply has become the number one key concern, adding that affordability is expected to worsen unless supply constraint is urgently addressed by state and federal governments.
“Over the year, new loans have decreased 17.2% to 93,956 with loans to first-time buyers dipping by one-third (32.6%) to 29,127”, he noted.
“Loan values increased by 11.6% over the year with the average loan size now $612,079.”
The report shows that rental affordability also declined in the June quarter 2022, with the proportion of income required to meet median rent increasing to 22.9%. This was an increase of 0.4 percentage points over the quarter and an increase of 1.2 percentage points over the past 12 months.
Over the quarter, rental affordability improved in Victoria but declined in all other states and territories with the least affordable region being Tasmania.
“The decline in housing affordability over the June quarter (down 2.7 percentage points) outpaced the decline in rental affordability, which fell 0.4 percentage points”, Groves said.
“Nationally, the proportion of income required to meet average loan repayments increased to 38.4%, an increase of 4.7 percentage points over that past year.
“This is due to a combination of rising interest rates and higher average loans with average loan repayments increasing over the past year by $621 per month.
“Housing affordability has declined in all States and territories over the past year, with NSW having the largest decline of 5.7 percentage points”, he added.
The REIA anticipates that with rental and sales listings remaining at historically low levels, supply will continue to be constrained for the foreseeable future.
“Supply chain challenges, rising building costs and labour shortages mean the pipeline of new homes for sale and rent will remain alone under long-term average levels”, Groves said, adding that in response, the Institute has launched a new campaign called ‘Axe the Tax’.
“The phaseout of stamp duty could increase listings on the market by up to 50% and it is in these big-picture economic and productivity reforms we must invest during the 47th parliament if we are to address housing supply shortages.
“While the outlook for housing affordability remains relatively gloomy, the next REIA Affordability Report, to be released in December 2022, should paint a clearer picture of the long-term impacts of inflation control measures”, he concluded.
