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Fewer now able to buy their own home

HOME loan affordability is close to the lowest point recorded by the Real Estate Institute of Australia (REIA) in the 22 years it has published affordability data.
The June quarter 2007 edition of the Deposit Power/REIA Home Loan Affordability Report found that 36.2 per cent of family income was required to meet average home loan repayments.
"Following the August 2007 interest rate rise, more pain is set to come for home buyers," says Graham Joyce, REIA President.
"There have only been two other quarters in the past 22 years when buying a home has been harder. In the September and December quarters in 1989, families required 0.2 per cent more of family income to meet average loan repayments.
"Affordability has fallen by 8.3 per cent over the past year, with every State and Territory suffering a deterioration. While Canberra and the Northern Territory are in an overall better position than the States, Canberra experienced the largest decline in the June quarter (-6.2 per cent), while Western Australia experienced the largest decline over the year to June 2007 (-13.5 per cent).
"New South Wales is the least affordable location, resuming the bottom spot after a brief reprieve in the March quarter when Queensland was the least affordable location," says Graham Joyce.
"With 36.2 per cent of family income required to make home loan repayments, the dream of home ownership is becoming out of reach for many Australians. However, in the near future, renting a property may not be a much cheaper alternative," says Keith Levy, National Manager, Deposit Power.
"Governments at Federal, State and local levels, must take cooperative action now to address the affordability problem through supply and demand levers including planning process reforms, infrastructure development, access to voluntary superannuation for a home deposit, review of the First Home Owners Grant and reduction of State property taxes," says Graham Joyce.
"A strategic approach is required to ensure that there is sufficient appropriate housing stock, including a mix of size, density, location and proximity to infrastructure and jobs, for the varied needs and aspirations of Australian families.
"Improving housing affordability requires more than investment in only low cost social housing.
"The Federal Government should appoint a Federal Housing Minister and Ministerial Council to develop a strategic plan in consultation with industry to address housing affordability.
"Both Federal and State Governments considered that there was a nation-wide problem in 2004 when the Productivity Commission reviewed first home ownership. Nothing happened: the problem just got worse," says Graham Joyce.