According to the latest report from the Real Estate Institute of Australia (REIA), the December quarter 2024 data shows housing affordability declined again with mortgage repayments now taking up 50.1 per cent of median family income.
However, with the RBA starting to cut interest rates, those numbers should start to turn around.
REIA President Leanne Pilkington said buyers and renters are stretched thin.
“Unfortunately, the first report of the year, covering the last quarter of 2024, has not brought good news for housing affordability,” Ms Pilkington said.
“This is the third consecutive quarter in which housing affordability has declined to a new all-time low.”
All states and territories experienced declining affordability, with Western Australia recording the steepest drop at 2.5 percentage points, while Victoria saw the smallest decline of 0.6 percentage points.
Rising property prices have been identified as the primary driver behind the affordability crisis, forcing buyers to take on larger mortgages.
“The average loan repayment now amounts to 50.1 per cent of the median family income, an increase of 1.4 percentage points, and the highest proportion since the REIA started monitoring housing affordability in 1996,” Ms Pilkington said.
Despite these challenges, national median weekly family income increased by 0.9 per cent over the quarter and 3.7 per cent over the past 12 months, reaching $2,528.
Interest rates remained relatively stable during the period, with the standard variable rate averaging 8.8 per cent and the three-year fixed rate decreasing slightly to 6.1 per cent.
The rental market offered a glimmer of hope, with rental affordability showing slight improvement.
The proportion of income required to meet median rent decreased to 24.7 per cent, a drop of 0.2 percentage points over the quarter.
New South Wales continues to be the least affordable state for renters, while the Australian Capital Territory maintains its position as the most affordable rental market in the country.
First-home buyer activity increased by 5.5 per cent over the quarter to 31,036 buyers, though this figure remains 1.3 per cent lower than the previous year.
Victoria led the way with 10,334 first-home buyers, while the Northern Territory recorded just 258.
The average loan size for first-home buyers increased by 1.2 per cent to $542,644, reflecting the continued pressure on entry-level buyers in the current market.
Despite the grim current picture, there are signs that 2025 may bring some relief to the housing market.
The Reserve Bank of Australia (RBA) implemented a 0.25 per cent interest rate cut in February, with expectations of further reductions throughout the year.
Historical data suggests each 0.25 per cent rate cut typically leads to a 1 percentage point decrease in the proportion of income required to service a mortgage, which could significantly improve affordability metrics in coming quarters.
Rising vacancy rates across several markets may also help slow rental price growth, providing additional relief for those in the rental market.
