Home-loan Relief, But Nsw Still Costly

At last home loans have become affordable ... in every State except NSW

Home buyers in NSW are faced with an average monthly mortgage repayment of$1,106 - $200 a month higher than the national monthly average of $906.

But although people in NSW are less able to afford property than people in other States, there has been a flurry of recent sales.

During the past two months, the Saturday Herald's Around The Auctions column has reported that more than half of the homes offered for sale have found new owners.

Last week alone, 186 of the 355 properties offered at auction sold. The sales reaped $43.3 million.

According to the Home Loan Affordability in Australia index - a joint report by the Real Estate Institute of Australia (REIA) and the mortgage guarantee company MGICA Ltd - home loan repayments across all States except NSW represent less than 30 per cent of the median family income.

Residents of NSW fork out more than 36 per cent on their mortgages.

The index represents the amount average monthly home loan repayments take out of an median family income. Thirty per cent of income is the maximum which institutions will allow a borrower to commit him or herself to repay.

Thus Australian households on the median family income, except in NSW, now meet the home-lending criteria for most institutions.

"The Australian dream of home ownership is beyond most NSW buyers," said Mr Bob Hunt, the institute's NSW president.

"We need more houses to be developed and for interest rates to come down."

The institute found that average Australian monthly repayments fell by 5 per cent from the December quarter to $906.

In the March quarter, home loan affordability across the board improved to a level not seen since 1988.

NSW may be be the worst State but it recorded the most significant improvement in March for the second consecutive quarter, with the repayment figure dropping 3.3 per cent from 40.2 per cent in the December quarter to 36.9 per cent.

We spend more than $1,000 a month of our median family income on our average mortgage but we are better off by more than $80 a month than we were last December.

Despite tumbling interest rates - which have made it easier for buyers to enter the market and eased the mortgage burden - the REIA has called for further drops in rates.

"The Federal Government should forget the next election and bring rates down by one percentage point to bring an easing to mortgage repayments, particularly for those who are unemployed," said REIA's national president, Mr Tom Nugent.

In the Northern Territory, home loans take an 18.5 per cent slice out of the medium income; in the ACT they take 19.4 per cent; in Tasmania 24.8 per cent; in Western Australia 26.1 per cent; in South Australia 29.2 per cent; in Victoria 29.5 per cent and in Queensland 29.7 per cent.

Australia-wide, home loan repayments accounted for 30.6 per cent of the median income - a 2 per cent drop from the December 1990 quarter.

According to the REIA/MGICA index, which has been following loan affordability since 1980, home-loan affordability gradually deteriorated until September 1989.

People have been more able to take on a home loan for six consecutive quarters, with March this year demonstrating the greatest improvement.

"This trend is set to continue given interest rates have fallen 1.5 percentage points since the March quarter," said MGICA managing director, Mr Ian Graham.

Mr Jonathan Sweeney, a first-time house hunter and full-time investment adviser, yesterday decided to miss out on a Paddington townhouse at a First National auction.

Mr Sweeney had enough money, $183,000, but thought better of the purchase.

"Sensible people are taking their time to look around," he said.