Home Loan Burden Eases To New Low

Home loan affordability in New South Wales improved in the March quarter as average monthly loan repayments dropped about $33 a month, according to new figures from the Real Estate Institute of Australia (REIA).

This represents the seventh consecutive improvement in housing affordability.

At 21.1 per cent, the March quarter ratio represented a 0.6 per cent improvement on the previous quarter and a 17 per cent improvement on the March quarter 1992.

The average monthly loan repayment fell to $745 in the quarter with the percentage of median family income spent on home loans dropping to 24 per cent from 25.3 three months ago.

This was NSW's most affordable level since deregulation of the housing financial market in 1986, according to the REIA acting president, Mr John Greig.

The quarterly survey revealed an $11 improvement nationally - a 17 per cent improvement in home loan affordability in the March quarter over a year ago.

The average monthly loan repayment fell to $653 in the quarter. That represents 21.1 per cent of median family income being spent on home loans, from 21.7 in the December quarter.

"Lower interest rates, produced by strong competition among financial institutions for the mortgage dollar, contributed significantly to this improvement," Mr Greig said.

"Home loan affordability also benefited from a 1.4 per cent ($9) increase in average weekly earnings in the March quarter."

The ratio of average loan repayments to median family incomes was now 42 per cent below the 36.5 per cent peak in the 1989 September quarter.

"The average monthly repayment fell by approximately $11.00 to $653 in the March quarter ", Mr Greig said. Last week agents sold 170 of the 297 listed properties for $40.37 million. The average price was $237,000. The clearance rate was 57 per cent.

In May agents sold 674 of the 1,286 listed properties. They were worth$189.5 million.

The 52.4 per cent clearance rate was slightly higher than in May last year when 51 per cent of the 1,455 listed properties were sold for $189 million.

But more than double the number of properties were listed in May 1991. In that month 1,098 of the 2,297 listed properties were sold for $285 million. The clearance rate was 48 per cent.

In May 1990, 534 of the 1,503 listed properties were sold for $144 million. A similar result was recorded in May 1989 when 490 of the 1,255 listed properties were sold for $147 million.

The managing director of Australia's largest private mortgage insurer, MGICA Ltd, Mr Ian Graham, said low inflation and economic activity, together with continuing competition among financial institutions should be reflected in further improvements in home loan affordability in the current quarter to the end of June.