Australians spending half their income on mortgage repayments: report

Housing affordability has reached an “all-time crisis point” with families forced to spend almost half their income on mortgage repayments, experts have warned.

A report by the Real Estate institute of Australia found the average household was now spending just under 48 per cent of their income on home repayments.

The Housing Affordability Report, which is released quarterly, also found housing affordability has declined a substantial 2.7 percentage points in December 2023.

REIA President Leanne Pilkington said that with the current cash rate it was “no surprise” affordability was at its lowest on record since the REIA’s first ever report.

“Housing affordability in NSW, Victoria, South Australia, Tasmania and the ACT is at its lowest point in 20 years,” she said.

“Queensland emerged as the biggest loser in the affordability stakes declining in housing affordability by 2.8 per cent in the quarter.

“Only with rate rise relief will we see changes to this outlook.”

The Reserve Bank of Australia announced last month it would leave the official cash rate at 4.35 per cent, which was first set in November 2023.

At the same time, Ms Pilkington warned rental affordability had also taken a hit with median rent increasing nationally to a whopping 23.9 per cent of household income.

Rental affordability fell in the most recent report in Victoria, Queensland, Western Australia, Victoria, Tasmania, South Australia, and the Northern Territory.

The only states and territories where renters were not dealt an immediate blow were NSW and the ACT, where the REIA found rental affordability was unchanged.

“Perhaps responding to critical rental conditions, this quarter showed positive results for more active entry level buyers,” Ms Pilkington said.

“The number of first home buyers increased to 31,445, an increase of 16.8 per cent over the quarter and an increase of 12.8 per cent compared to the December quarter 2022.”

The average loan to first home buyers also increased to $514,664 in December 2023, representing a 5.5 per cent increase over the past 12 months.

The total number of loans for owner occupied dwellings also increased in all states and territories over the December quarter between 9.7-25.3 per cent.