Nowhere to hide as owners, investors, first-home buyers and renters face challenges


New housing loan commitments fell 6.4 per cent, with housing and rental affordability also declining across Australia.

New housing loan commitments fell 6.4 per cent in April, with housing and rental affordability also declining across Australia.

Investors and owner-occupiers alike were shying away from new loan commitments, with the value of new housing loans falling to 7.3 per cent for owner-occupier lending and 4.8 per cent for investor lending.

But any hope that the easing of property demand will significantly help first-home buyers appears slim.

Housing affordability has declined over the first quarter of 2022, with the proportion of income required to meet loan repayments increasing to 37.3 per cent, an increase of 0.2 percentage points.

All sectors of the property are facing challenges, with prices falling in major capital cities around the country, cost of living and interest rate rises hitting affordability for aspiring buyers, and renters also having to dig deeper if they can even find a place to live with vacancy rates at historic lows.

First-home buyers now make up 31.6 per cent of owner occupier dwelling commitments, a decrease of 2.7 percentage points over the quarter and 8.7 percentage points over the year. The number of first home buyers fell over the March quarter in all states and territories.

Rental affordability declined even more than housing affordability, with the proportion of income required to meet median rent increasing by 0.5 percentage points to 23.5 per cent.

Tasmania remains the most unaffordable state to rent with income to rent needed sitting at a huge 30.8 per cent. Rental affordability declined in all states and territories except the Northern Territory.

There was a further drop in the number of new homes approved for building across Australia during April 2022.

What about when rates really hit?

REIA President, Mr Hayden Groves said the RBA’s announcement of further interest rate hikes is likely to see further declines in housing affordability but added that they remain historically low and will hopefully help slow rising inflation.

According to Mr Groves, the average loan size to first home buyers increased to $475,544. This was a rise of 0.9 per cent over the quarter and an increase of 11.7 per cent over the past twelve months.

“With the Federal Election 2022 now behind us, it is time to get to work on the fundamentals of housing supply and affordability for Australia’s renters, first-time buyers and homeowners,” he said.

Despite the fall in new loan commitments being the biggest falls in two years, Mr Groves said perspective needed to be maintained.

“Market sentiment has become more cautious among buyers.

“Despite this, the value of new owner-occupier loan commitments is still 44 per cent higher than it was two years ago and 113 per cent higher for investor loans,” he said.

The falls are typically higher in New South Wales and Victoria, down 12.6 per cent and 9.7 per cent respectively.

Steve Mickenbecker, financial commentator for Canstar, said the fall in home lending in April was still surprisingly high and revealed a softening property market even before the Reserve Bank cash rate increases in May and June.

“If just the expectation of interest rate increases contributed to dampening demand for new lending in April we could see a more dramatic adjustment of buying intentions emerge down the track.”


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