- Affordability improved by 0.3% during June quarter
- Income-to-rent hit 22.8% nationally
- Proportion of income to service a mortgage is 35.4% - above what is considered to be "mortgage stress"
Rental affordability improved marginally across Australia, according to the latest quarterly Housing Affordability paper released by the Real Estate Institute of Australia (REIA).
Over the June quarter affordability improved by 0.3% due to the proportion of income required for rent decreasing to 22.8% nationally.
Specifically, affordability improved in New South Wales, Victoria, Queensland and South Australia while it stabilised in Tasmania and the Australian Capital Territory.
Western Australia remained the most affordable place to rent, with the median income to rent ratio currently sitting at 19%, with Tasmania the least affordable at 29.9%.
REIA President Adrian Kelly said that although there have been prolific media headlines about the availability and cost of private rentals, affordability of rent in comparison to median income remains constant – something that should be reflected in government housing policy settings.
On the other side of the equation, Mr Kelly noted that house sales continue to record premiums.
“The weighted average capital city median house prices increased to $913,946 and average loans size increased by 8.3%,” he said.
Income required to meet loan repayments has increased by 2.1% to 35.4% – 1.9% higher compared to the same quarter last year.
To put this into perspective, spending more than 30% of income servicing a mortgage is referred to as ‘mortgage stress’.
While housing affordability improved over the June quarter in Tasmania and the Northern Territory, it declined in all the other states and the ACT. New South Wales had the largest increase of home loans at 11.1%, $70,311 higher than the last quarter.
While noting there are some rental opportunities, Mr Kelly says many external factors will dampen the spring market.
“With sustained low-interest rate environments, there are still opportunities where it is cheaper to rent than buy,” Mr Kelly added.
“As we enter spring selling season, half of Australians are living under lockdown conditions and Australia has only just narrowly missed a technical recession.”
Adrian Kelly, REIA President