First home buyers face tough times
Wednesday January 16, 2008
Not only is renting a property difficult in today's economic times but purchasing a property is also difficult and those who are seeking to become first home buyers are finding it increasingly difficult to achieve their goal of owning their own home.
Figures released by the Real Estate Institute of Australia (REIA) showed that home loan affordability in Australia was at its lowest point in 22 years.
The September quarter 2007 edition of the Deposit Power/ REIA Home Loan Affordability Report found that 36.6% of family income was required to meet average home loan repayments.
Affordability was worse in every State and Territory except Tasmania, both over the quarter and over the year. Australia wide, affordability declined 2.2% over the quarter and 8.1% over the year.
REIA President Noel Dyett said after the November interest rate rise that it would likely have a further negative impact on home loan affordability in the December quarter.
'Purchasing a home has never been more difficult in the past 22 years. The progressive decline in affordability and concerns about interest rate rises are reflected in the lower number of loans taken out in the September quarter compared with the previous quarter."
"The number of loans decreased in all States and Territories except the Northern Territory," he added.
Below is a state by state summary of how much of the family income is required to repay the mortgage.
New South Wales is Australia's most expensive state with 38.3% of the family income required to meet average home loan repayments.
Queensland is the second most expensive with home owners needing to pay 38.0% of the family income towards the average home loan repayment.
Victoria, Tasmania and Western Australia came in at a joint third in affordability with home owners required to part with 34.8% of the family income to meet home loan repayments.
However, Tasmanian's did enjoy an advantage in that a decrease in the size of loans being taken out offset any interest rate rise.
34.7% of the family income is required in South Australia to meet home loan repayments. Home loan affordability fell by 4.6% and by 14.3% over the year, the largest declines in home loan affordability in Australia.
You need 22.4% of the family income to put towards your home loan repayments in the Northern Territory while those in the Australian Capital Territory only needed to part with 20.7% of the family income to meet the average home loan repayments.