Home loan affordability improved in 12 months to March: PRDnationwide

Home loan affordability improved in 12 months to March: PRDnationwide
Home loan affordability improved in 12 months to March: PRDnationwide

Australia’s home loan affordability improved by 4.4 percent over the past 12 months, and was at 32.9 index points in March 2017, according to PRDnationwide’s latest figures.

Topping the Australian Home Loan Affordability Indicator was Australian Capital Territory (ACT) with an index reading of 49.7 points, well above the average of 32.9 points. 

In terms of increase, the Northern Territory led the way with 10.2% improved affordability (47.4 index points), followed by Victoria at 6.6% (30.8 index points), according to the PRDnationwide Key Economic Indicators.

The Q3 2017 Key Economic Indicators are a snapshot of the current state of affairs from an economic and property perspective, according to PRD and includes such statistics as  the number of loans to first home buyers, home loan affordability index, dwelling approvals and standard variable loan among others.

New South Wales, with an index reading of 27.7 index points, was the lowest. However, home loan affordability in NSW also grew by 3.7% over the past 12 months and is on par with Queensland (3.6%).

Consumer sentiment is a key indication of the general population’s confidence in the economy, whereby a higher index point reading suggests consumers are more willing to spend rather than save. 

Consumer sentiment remained under the positive line (100 index points) in August, currently at 95.5 index points. This was 5.5% lower since the last 12 months, and the lowest since then suggesting consumers are cautious, and  more willing to save than spend. 

Among other measures, the standard variable loan fell slightly to 5.2% this quarter, which PRD says should help in building consumer confidence over the next few months.  

Meanwhile, weekly median income also grew 2.2 percent in the 12 months to March to $1,688.

Median income rose in all states, with South Australia leading the way with a 4.1% increase to $1,545 per week. 

Consumer price index has decreased to 1.9 index points, suggesting goods and services are more affordable when compared to the previous quarter. This is good news for household income, and should further assist in increasing consumer sentiment.

However, affordability for first home buyers continues to be a concern, according to the real estate agency.

Over the past 12 months the number of loans to first home buyers in Australia rose to 20,677, an increase of 1.4 percent from 20,401.

Surprisingly the number of first home buyers have decreased the most in Tasmania, by 11.1% over the past 12 months, attributed to the increasing number of interstate investors taking advantage of Tasmania’s lower median property prices.

Tags: 
Housing Affordability Economic Data

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