Third quarter had highest number of first-home buyers for 10 years

Australia has recorded a 10-year high for first-home buyers in the last quarter, according to the latest Real Estate Institute of Australia (REIA) study, entitled The Housing Affordability Report.

The report revealed a high for first-home ownership not seen in a decade, plus an overall improvement in housing affordability across the country.

REIA President, Adrian Kelly, said a combination of factors meant that housing affordability had created a bright spot for those who entered the market during the quarter ended September 2020.

Largest year-on-year increase since 2009

“Market entry has experienced its largest year-on-year increase since 2009 and largest quarterly increase since 2010,” he observed.

“With a September quarter increase of 36.1%, first-home buyers now make up 40.8% of the owner-occupied dwelling market. This is particularly good news given the large challenges faced by tenants at the outset of the Covid-19 pandemic.”

Among the notable statistics from the report is that the average loan amount to first-home buyers decreased to $406,223, a reduction of 5.4% over the previous quarter, but an increase of 0.8% over the past 12 months.

Stable market and very low interest rates

Kelly believes first-home buyers are responding to the stable market and historically low interest rates.

“Banks could do more to further improve affordability by passing on in full interest cuts and help even more Australian’s buy homes,” he added.

“The Housing Affordability Report AR shows that Australian families experienced a small income increase of 0.5 %, while the average loan repayment decreased by 2.5 %.”

For renters, affordability has declined

Kelly noted that for homeowners affordability had improved, with income-to-loan repayments decreasing 1.1 percentage points to 33.9% over the current quarter.

“For renters, affordability declined in the September quarter and over the past year, with the proportion of income required to meet rent payments increasing by 0.4 percentage points to 23.7%. This is mainly attributed to the increase in rents in a number of capital cities,” he said.

The next report will be released on 3 March 2021 and will provide a full picture of the impact of Covid-19 on housing affordability for 2020.