Housing affordability continued to decline in the December quarter of 2021, with the proportion of income required to meet loan repayments now reaching 37 per cent, according to the Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report.

REIA president, Hayden Groves, says with interest rate increases looming, affordability could continue to worsen for both renters and home buyers.

“We are urging governments to get on the front foot with this issue by prioritising housing supply shortages which is the most effective way of getting affordability under control,” said Mr Groves.  

In most states and territories, the decline in affordability ranged from 0.1 per cent in WA to 5.9 per cent in NSW.

Mr Groves said the number of first home buyers fell by 0.4 per cent in the December quarter, hitting a new low of just 37,620 buyers nationally.

First home buyers now make up 34.1 per cent of owner-occupied dwelling commitments, which is a decrease of 7.8 per cent over the year.

“The average loan size to first home buyers increased to $470,548. This was an increase of 2.5 per cent over the quarter and an increase of 12.9 per cent over the past 12 months,” he said.

“The average loan size to first home buyers increased in all states and territories except Tasmania, where it decreased 0.4 per cent. Increases ranged from 0.8 per cent in WA to 2.9 per cent in both NSW and Victoria.

“The total number of loans for owner occupied dwellings increased in Victoria (4.1 per cent), Queensland (1.2 per cent), SA (5.1 per cent), WA (2.7 per cent), and Tasmania (5.0 per cent), but decreased in NSW (0.1 per cent), the NT (5.5 per cent), and the ACT (3.7 per cent).”

For rentals, Mr Groves said the proportion of income required to meet the median rent increased to 23 per cent, a 0.1 per cent quarterly change.

“Over the December quarter, the average loan size increased to $590,482, an increase of 3.5 per cent over the quarter and an increase of 17.7 per cent over the past 12 months. This is the largest annual increase since the current series began in 2002,” he said.

“The average loan size increased in all states and territories over the past 12 months, with Victoria recording the highest annual increase at 22.6 per cent.”

Get all the latest Canberra news, sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Canberra Daily Daily Newsletter. Sign up here.