Australian homes are more affordable than they were a year ago despite an increase in average mortgage sizes.
The national study by the Real Estate Institute of Australia and Adelaide Bank found less income was needed to meet mortgage repayments during the September quarter.
First-home buyers are also flocking to the market to take advantage of lower interest rates.
Adelaide Bank general manager Damian Percy says this was occurring in parts of Australia where it is cheaper to buy than rent.
“Around a fifth of all homebuyers are first-home owners who have decided to come down on the buy side of the equation”, he said.
In the three months to September 30, the proportion of income required to meet home loan repayments fell by 0.1 percentage points to 31.8 per cent, marking the fifth consecutive quarter of affordability improvement.
Homes are more affordable than the corresponding period in 2011, when it took 34.4 per cent of take-home pay to service a mortgage.
Better affordability has led to more first home buyers taking up a mortgage, with their ranks swelling to 19 per cent of the market in the September quarter, from 17.9 per cent during the previous quarter.
The ACT continues to be Australia’s most affordable housing market, with just 18.9 per cent of income needed to pay off a loan.
In NSW, 36.5 per cent of pay was needed to meet mortgage repayments, and this state posted the biggest quarterly improvement in affordability.
Queensland and the Northern Territory also became more affordable during the September quarter.
The national improvement in housing affordability occurred as average home loans grew by one per cent to $320,542, taking average monthly loan repayments to $2176 or $544 a week.
During the same period, the Reserve Bank of Australia (RBA) left interest rates on hold at 3.5 per cent.
Source: Ninemsn finance: http://finance.ninemsn.com.au/pfproperty/buying/8575346/aussie-home-affordability-improves-report