Homeownership and tenancies across Australia continue to face a lack of supply and rising interest rates, causing housing affordability to worsen in the 2022 June quarter, says Real Estate Institute of Australia (REIA) president Hayden Groves.
The REIA’s latest Housing Affordability Report predicts a grim outlook for housing supply, with Mr Groves calling the issue “the number one concern”. If the state and federal governments do not urgently address the supply constraints, “affordability is expected to worsen”, he said.
In the past year, new home loans have decreased by 17.2 per cent to 93,956, and first home buyer loans significantly slipped by 32.6 per cent to 29,127.
Additionally, loan values soared by 11.6 per cent, with the average loan size now $612,079.
The outlook for rental affordability is similar, with the proportion of income required to meet median rents rising to 22.9 per cent – an increase of 0.4 percentage points over the June quarter and 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 state or territory in which to rent a property being Tasmania,” Mr Groves said.
“The decline in housing affordability over the June quarter (down 2.7 percentage points) outpaced the decline in rental affordability (down 0.4 percentage points).
“Nationally, the proportion of income required to meet average loan repayments increased to 38.4 per cent, an increase of 4.7 percentage points over the 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 (down 5.7 percentage points).”
Mr Groves anticipates housing supply to continue to be constrained for the foreseeable future due to rental and home sale listings remaining at historically low levels.
“Supply chain challenges, rising building costs and labour shortages mean the pipeline of new homes for sale and rent will remain under long-term average levels,” he said.
“REIA’s key focus is to look for ways to better utilise our existing housing stock, and at the time of writing, REIA had launched a new Axe the Tax campaign.
“The phase out of stamp duty could increase listings on the market by up to 50 per cent and it is in these big picture economic and productivity reforms we must invest in during the 47th Parliament in an effort to address housing supply shortages.
“Whilst 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.”
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