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Going still tough for home buyers HOME loan affordability improved slightly across Australia in the March quarter 2006, but for many, the going is still tough.The Real Estate Institute of Australia (REIA) March quarter 2006 Home Loan Affordability Report found that average loan repayments consumed 31.9 per cent of median weekly family income, an improvement of 0.4 per cent over the December quarter 2005, although a 0.5 per cent deterioration over the year. Home buyers in New South Wales, Queensland and Canberra were the only beneficiaries of this improvement, as affordability deteriorated elsewhere. In New South Wales, home loan affordability improved, with 35.4 per cent of family income required to pay the average loan, 1.1 per cent less than the previous quarter, but still the most unaffordable in the country. There was also an improvement in home loan affordability in Queensland, with the proportion of family income required decreasing from 33.7 per cent to 33.4 per cent, although this was the second most unaffordable location. The most affordable location was Canberra, with the proportion of family income required to pay the average loan dropping from 19.9 per cent to 18.8 per cent, and taking over the lead position from the Northern Territory, where rising house prices saw home loans consume 19.1 per cent of family income, up from 18.6 per cent. In addition to the Northern Territory, affordability also deteriorated in Victoria (where 30.8 per cent of family income is required), Tasmania (31.6 per cent), South Australia (28.6 per cent) and Western Australia (28.4 per cent). Tony Brasier, REIA President, said: "The situation continues to be very grim for first home buyers in particular. Only 19.1 per cent of those who borrowed to buy a home in April 2006 were first home buyers. "While this is an improvement on the very low average of 15.1 per cent during the period July 2002 to June 2005, unfortunately the return of first home buyers to the market has been slow. The figure compares poorly with the historical average of first home buyers representing 21.8 per cent of all dwellings financed during the period from 1991 to 2002. "Although house prices are not rising as dramatically now as in previous years in most cities, home buyers still have to borrow large sums of money to enter the market. "The average size of a first home buyer's loan in the March quarter was $223,000. A loan of this size requires monthly repayments of around $1520. "Median weekly family income in the March quarter was $1151, but many young families earn considerably less than the median income. They also have additional income pressures related to starting a family, and repaying HECS debts. "Even if they can save the money to pay a deposit on a home, and meet ongoing repayments, they are further challenged by the tax burden imposed on them by State Governments. State stamp duties on residential property purchases are inequitable and must be removed if home ownership is to become more affordable. "Only New South Wales has addressed the problem of stamp duty for first home buyers. Elsewhere, Governments continue to fatten their coffers, while first home buyers struggle. Recent state budgets have done little to address the problem." On an indicative house price of $300,000, first home buyers pay from a low of $1,000 to 2,000 in stamp duties in Canberra and Queensland, to between $4000 and $6500 in the Northern Territory, Tasmania and Western Australia, to a shameful $11,330 in South Australia and $13,660 in Victoria. "The first home buyer's grant of $7,000 does not even meet the State Government's stamp duty bill in some States. The first step in getting real about increasing the number of first home buyers in the market must be exemptions from stamp duties," Mr Brasier said. |
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