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Housing affordability crisis in Australia reaches unprecedented levels, REIA reports


The Real Estate Institute of Australia (REIA) has revealed disturbing figures in its December 2023 Housing Affordability Report (HAR), highlighting a sharp decline in housing affordability across the nation.

This comes in the backdrop of a challenging economic environment with high cost-of-living pressures as Australia moved into the holiday season after a tumultuous year marked by aggressive interest rate adjustments by the Reserve Bank of Australia (RBA). REIA President, Ms. Leanne Pilkington, commented on the severity of the situation, noting that the housing affordability for mortgagees is at an all-time low since the inception of the REIA HAR.

“Nationally, housing affordability has declined a substantial 2.7 percentage points over the quarter, and the average household is now spending 47.7% of their income on mortgage repayments,” she explained. Pilkington highlighted the impact on various regions, stating, “Housing affordability in New South Wales, Victoria, South Australia, Tasmania, and the Australian Capital Territory (ACT) is at its lowest point in 20 years. Queensland emerged as the biggest loser in the affordability stakes declining in housing affordability by 2.8% in the quarter.”

The report also sheds light on rental affordability, indicating mixed results across the country. Despite improvements in rental affordability in New South Wales and stability in the ACT, the overall national perspective is less positive. “The proportion of income required to meet median rent increased by 0.3 percentage points to 23.9%. This translates to a decline in rental affordability in most states: Victoria, Queensland, South Australia, Western Australia, Tasmania, and the Northern Territory,” Pilkington mentioned. She emphasized the need for a dramatic increase in rental supply to improve this situation. However, the report also provided a silver lining, revealing an increase in the number of first home buyers entering the market. “The number of first home buyers increased to 31,445, an increase of 16.8% over the quarter and an increase of 12.8% compared to the December quarter 2022,” she said.

This positive development saw variations across jurisdictions, with notable increases in the average loan size to first home buyers. “Overall, the average loan size to first home buyers increased to $514,664. This was an increase of 2.3% over the quarter and an increase of 5.5% over the past 12 months,” she added. Moreover, the total number of owner-occupied dwelling loans saw an upward trend. “The total number of owner-occupied dwelling loans increased to 83,620, an increase of 11.7% over the December quarter and an increase of 2.8% over the past year,” said Pilkington.

The insights from the HAR highlight the complexities and challenges in Australia’s housing market, with significant implications for affordability and access to housing.

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