Good news for investors and home owners!

Recognised as the most authoritative indicator of Australian housing affordability, the recently released REIA (Real Estate Institute of Australia) Housing Affordability Report shows housing affordability has improved slightly in the June quarter.

What the report means for investors

Over the June quarter, rental affordability in New South Wales remained stable with the proportion of income required to meet median rents remaining at 27.5% over the quarter. However, compare this to year on year figures for the corresponding quarter, and there’s actually a decrease of 0.5 percentage points this year.

For property investors, these figures indicate people can still afford to rent, and vacancy rates will potentially remain low – something we’ve consistently been good at achieving.

Over 400 investors trust us to take care of their assets, and even when Covid was at its peak, the properties we managed were still well under the average vacancy rate for Newcastle; in April, the average for the area was 2.1, but we sat at 1.8%, whilst in August Newcastle was at 1.2% and Newcastle Property Management was 0.3%.

What the report tells us about home ownership

At a national level, REIA president, Adrian Kelly said the proportion of household income required to meet loan repayments decreased by 0.2 percentage points to 34.5% over the quarter.

He pointed out that while family income barely rose during the second quarter at just 0.1 percentage point, record-low interest rates brought loan repayments down.

“The average loan repayment decreased 0.6 percentage points through a drop in the average variable standard interest rate,” he said.

Housing affordability in New South Wales is generally higher than the national average, but over the June quarter, even in our state, housing affordability has improved. The proportion of income required to meet loan repayments decreased to 42.3%, a decrease of 0.2 percentage points over the quarter. However, year on year, this an increase of 2.4 percentage points compared with the corresponding quarter 2019.

Despite this, the number of dwelling loans in New South Wales increased to 20,951, an increase of 4.2% over the quarter and an increase of 1.2% compared to the June quarter 2019.

And first home buyers are taking advantage of the numerous grants and low interest rates. In New South Wales, the number of loans to first home buyers increased to 6,801, an increase of 2.7% over the quarter, and an increase of 16.0% compared to the June quarter 2019.

In a nutshell, these figures indicate home ownership is affordable to many, the market is still buoyant and people are still looking to buy. We’ve certainly been experiencing strong sales, and with the continued record low interest rates and plenty of government incentives to encourage home buyers, we suspect the trend will continue.

About the Housing Affordability Report

The quarterly Housing Affordability Report is recognised as the most authoritative indicator of Australian housing affordability. Subscribers to the Report include state and Federal Treasuries, the Reserve Bank of Australia, academic institutions, financial institutions, libraries, brokers, developers and major consultancy groups.

As one of Newcastle’s longest established real estate offices, we know the area and we know the market, so give us a call on 02 4954 8833 or send us an email to mail@apnewcastle.com.au.