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First home buyers are still suffering despite improved housing affordability, according to the latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability report.
The report shows that while the proportion of income required to meet loan repayments decreased by 1.2 percentage points to 29.8 per cent in the September 2013 quarter, first home buyers continue to leave the market.
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Damian Percy, general manager of Adelaide Bank, said increased affordability is good for aspiring home buyers but cautioned that first home buyer figures show more must be done.
“The continued improvement in housing affordability is a welcome result for aspiring home owners,” Mr Percy said. “Low interest rates and modest rises in family incomes have combined with relatively stable average loan sizes in many parts of Australia to maintain the trend of the last three years.
“Less pleasing, and of genuine concern, is the very low level of first home buyer activity over the most recent quarter. First home buyers remain a strong indicator of the underlying health of the Australian housing market. Their absence over recent months suggests that although affordability is improving, it needs to improve further,” he said.
The number of new finance commitments for first home buyers decreased by 5.1 per cent to 21,307 in the September quarter, a drop of 18.3 per cent from the same quarter last year.
While investors have been widely blamed for pushing out first home buyers, the report indicates they are leaving the owner-occupied market too. Falling 1 per cent from the previous quarter, first home buyers made up just 13.6 per cent of the market in September.
Mr Percy said more needs to be done to ensure more Australians can afford to buy their first home.
“Improving housing affordability must remain the focus of both governments and industry participants,” he said. “At Adelaide Bank, we understand that the best way a bank can contribute to improving housing affordability is to keep the cost of lending as low as possible.”
