Women looking at homes for sale
Women looking at homes for sale BananaStock

Easier times for owners but renters feel cash squeeze

FAMILY budgets have eased slightly, with new figures showing housing affordability has improved for home owners.

But while the latest Adelaide Bank/REIA Housing Affordability Report held good news for owners, the costs for renters has gone up.

The report also showed a further decline in the number of first home buyers active in the market.

According to the report, housing affordability improved across all states and territories in the first quarter of 2017.

The proportion of median family income required to meet average loan repayments decreased by 1.3 percentage points to 30.4 per cent.

And while home owners may have felt the relief, renters did not.

The report also found that over the March quarter, the proportion of median family income required to meet rent payments increased by 0.1 percentage points to 24.6 per cent.

The result coincides with a slow down in investor lending.

Historically, rental affordability declined markedly from the June quarter 2007 reaching its lowest point in the March quarter 2010.

Since then rental affordability has been showing a trend improvement, reflecting the pick-up in investment in housing from the end of 2011.

The affordability report also found first home buyers continue to feel the pinch, but all that may changed ahead of the impending start of stamp duty exemptions in NSW.

REIA President Malcolm Gunning said first home buyers now make up 13.4 per cent of total owner occupied housing.

This rate has been dropping steadily over the past 5 years yet seems to have stabilised over the past 18 months.

In good news however, the report found first home buyers budgets are easing.

"The average loan size to first home buyers decreased by 3.2 per cent over the March quarter and decreased by 0.4 per cent over the past twelve months, to $313,433,” Mr Gunning said.

"It will be interesting to see the effects that stamp duty exemptions and concessions have on first home buyers.”

From July 1, NSW first home buyers will not pay stamp duty on new or existing homes up to $650,000. There will also be a $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000, plus the scrapping of insurance duty on lenders' mortgage insurance (LMI).

Mr Gunning anticipates that more first home buyers will be enticed to enter the market place.

"However, it will take time for any response to filter into our data as the changes do not come into effect until 1 July 2017 in either state,” Mr Gunning said.



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