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Australian first home buyers dominated the market in 2020, increasing their market share by 50.4 per cent in the past year.
The Real Estate Institute of Australia (REIA) has released their latest Housing Affordability Report, which showed that while housing affordability declined nationally in the December quarter, it improved over the year by 0.7 per cent.
Higher house prices and larger loans were deemed the main contributors to the quarterly affordability decline, according to REIA president Adrian Kelly in a statement.
Mr Kelly said that median house price rose across the country in 2020 despite doomsday predictions, due largely to increasing first buyer demand.
Overall, first home buyers increased their market share by 50.4 per cent over the year, motivated by low interest rates and the range of first home buyer incentives on offer, Mr Kelly explained.
Noting that while the rising trend in home ownership is great news, Mr Kelly opined that increasing house prices could further decline affordability unless supply levels are improved, particularly in regional Australia.
As of date, the proportion of income required to meet loan requirements – the measure for housing affordability – nationally has increased to 34.8 per cent.
Across states and territories, NSW stood out as the least affordable, with proportion of income required to meet loan repayments at 44.6 per cent, while the most affordable is the Northern Territory at 21.9 per cent.
“It is now more affordable to buy than rent in the Northern Territory,” Mr Kelly said.
In the rental market, affordability declined by 0.2 per cent over the quarter, with the proportion of income required to meet rent payments increasing to 24.0 per cent. However, the number increased annually by 0.4 per cent nationwide.
Tasmania took the record of the least affordable state to rent, with the proportion of income required to meet rent repayments now higher than the national level at 29.5 per cent.
On the other hand, Western Australia is the most affordable, with the proportion of income required to meet median rents increasing to 17.8 per cent.