Australian housing affordability plummets to all-time low: Real Estate Institute of Australia

Just when you thought the housing crisis couldn’t get any worse, this report paints the bleakest picture yet.

Aussie are forking out more on their mortgages each month than ever before.

Australian housing affordability has plummeted to an all-time low, according to one of the nation’s biggest real estate lobby groups.

The Real Estate Institute of Australia (REIA)’s latest Housing Affordability report for the September quarter showed average loan repayments amounted to 48.6 per cent of the median family income of $2501 a week.

This is the greatest proportion since the REIA began monitoring housing affordability in 1996.

From July to September, the average monthly loan repayment surged to $5269 — rising 1.6 per cent over the quarter and 10.3 per cent in the past 12 months.

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REIA president Leanne Pilkington said these figures underscored the persistent challenges faced by families striving to enter the housing market or manage their existing homes.

“Rising mortgage sizes coupled with stagnant variable interest rates continue to push affordability further out of reach,” Ms Pilkington said.

“Despite the Reserve Bank of Australia maintaining the cash rate at 4.35 per cent and a stable quarterly average standard variable interest rate of 8.8 per cent, the affordability crisis persists.

“The quarterly average three-year fixed interest rate saw a slight decrease of 0.5 percentage points to 6.3 per cent, but this has done little to alleviate the mounting pressures on borrowers.”

Ms Pilkington said families were facing persistent challenges trying to enter the housing market.

The number of new loan commitments for first-home buyers fell by 3.9 per cent compared to the previous quarter but remained 9.4 per cent higher year-on-year.

However, the typical loan size for first-time purchasers rose 0.8 per cent over the quarter and 6.7 per cent in past 12 months to $536,561.

She added that the data revealed the need for targeted policy interventions to address housing supply and affordability issues.

“Without meaningful actions, homeownership will remain an increasingly elusive goal for many Australians,” she said.

Rental affordability also fell over the quarter, with the proportion of income needed to meet median rents increased by 0.3 percentage points to 24.9 per cent.

It declined in all states and territories expect Victoria, Queensland and the ACT.

Housing and Renting Affordability graph from the REIA Housing Affordability report for the September quarter.

Real Estate Buyers Agents Association of Australia (REBAA) president Melinda Jennison said affordability underpinned market performance across capital cities in 2024 as the high-interest-rate environment continued to drag down borrowing capacity.

“Widespread affordability challenges, rising construction costs, as well as a higher proportion of investors and first-home buyers have also driven stronger demand in these lower-value market tiers,” Ms Jennison said.

“While affordability challenges persisted throughout the year, with debt servicing ratios reaching record highs, continued population growth and a constrained supply of new housing have underpinned property prices.”

Ms Jennison said housing affordability underpinned market performance across the year.

She said there was mixed performance across capital cities and regional markets throughout the year.

“Among the capital cities, Sydney experienced relatively subdued growth, with Melbourne recording a slight annual decline in dwelling values,” she said.

“Affordability constraints and rising advertised stock levels were key factors contributing to softer conditions there … with Melbourne also impacted by government policy changes impacting on property market sentiment.”

Ms Jennison said Brisbane, Adelaide and Perth were the top-performing capitals and achieved strong annual growth.

“These cities benefited from a combination of affordability, strong demand and low inventory levels,” she said.

“Hobart’s market remained largely flat, while Darwin stabilised after earlier declines, and Canberra posted modest growth.”

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