louisekennerley1 Housing affordability in Australia has continued to decline over the June quarter, according to a Real Estate Institute of Australia (REIA) report.

The Deposit Power Housing Affordability Report shows that the decline in the June quarter was the sixth consecutive quarterly decline in housing affordability.

REIA president David Airey says what’s of great concern is that the percentage of income required to meet loan repayments is approaching 35 per cent, a level not seen since the third quarter of 1990, when the quarterly average banks’ variable mortgage rates were at approximately 16.4 per cent.

“With the exception of Tasmania and the Northern Territory, housing affordability decreased across all Australian states and territories, with the proportion of income required to meet loan repayments increasing two percentage points nationally,” he says.

Average monthly loan repayments have increased $446 over the year to June 2010 and the average loan is up $26,208 over the same period, according to the REIA report.

National manager of Deposit Power Keith Levy says housing affordability remains an ongoing issue for many Australian homeowners and prospective buyers.

“There is still a shortage of homes for sale and it appears that new development and construction isn’t keeping pace with demand in some areas,” he says.

“As a result the cost of entering the market remains high and the dream of owning a home still appears to be far from reality for many Australians.”

The Australian Capital Territory is still the most affordable state or territory in which to own a home, with the proportion of income required to meet loan repayments increasing to 18 per cent.

Meanwhile, New South Wales remains the least affordable state or territory in which to own a home with the proportion of income required to meet loan repayments increasing to 38 per cent.

Airey says the evidence for action on affordability is clear.

“There should be no further increases in interest rates as well as action from the new government on the supply side factors and an increase in the First Home Owners Grant with indexing to median house prices,” he says.

Story from Australian Property Investor Magazine