Home Loan Burden Now Not So Heavy

Sydney home loans, now averaging a monthly repayment of $780, are at the most affordable level since 1989 following the sixth consecutive quarterly improvement, the latest Real Estate Institute of Australia (REIA) survey shows.

Although Sydney remained unchallenged as the most expensive city for housing in Australia, the average Sydney housing loan repayment was down to 25 per cent of the $36,900 median family income in December.

In the 1989 September quarter about 45 per cent of median family income -or about $1,200 - was required in monthly housing repayments, the REIA home loan affordability survey showed.

The latest December quarter saw the ratio between income and loan repayments fall by 1.6 percentage point to 25 per cent.

The improvement in affordability over six successive quarters was due to significant interest rate reductions and falling house prices, the REIA president, Mr Grahame Werrell, said.

The survey revealed that the average housing loan repayment in December was$663, a drop of $280 since the June quarter 1991.

"In the 18 months since the June quarter 1991, the affordability ratio throughout Australia has plummeted 10.5 percentage points," Mr Werrell said.

However, he warned that continuation of the trend would depend on the level of demand generated by the economic recovery predicted for later this year.