New South Wales Faces Steepest Climb in Mortgage Payments

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Research conducted by the Real Estate Institute of Australia highlights a bleak milestone for New South Wales as alarming figures demonstrate that families are now allocating an average of 58.5% of their weekly income to service home loans. This surge has caused mortgage repayments to swell, with a noticeable uptick of about $800 monthly compared to figures from the end of the previous year.

The predicament for renters in New South Wales also remains distressing. Although there's been a slight dip in costs, the proportion of median family earnings required for rental payments continues to eclipse that of other regions, with nearly one-third – 27.3% – of income devoted to rent.

In contrast, Victoria, New South Wales’s neighbour, presented a moderately brighter scenario despite experiencing its own slide in both rental and housing affordability in the concluding quarter of 2023. Victorians found themselves committing 46.8% of their weekly earnings to mortgage repayments, up by 1.6% from the prior quarter.

Meanwhile, statistics show the Sunshine State of Queensland occupying the third rank in affordability pressures, with home loans consuming 45.1% of family incomes and rent, 22.3%.

Closely tracking Queensland are South Australia and Tasmania where the portion of family incomes servicing loans stands at 44.3% and 43.4%, respectively.

Conversely, the Northern Territory and the Australian Capital Territory (ACT) emerged as regions with a more manageable impact on weekly incomes. In particular, the ACT’s inhabitants allocated less than one-fifth of their income to rent and just over one-third to mortgage repayments. Highlighting the disparity, ACT families typically boast a weekly income surplus of nearly $800 compared to those in New South Wales and face considerably smaller home loan principals.

The affordability index improves further when considering the Northern Territory and Western Australia. Families in these regions enjoy relatively lesser financial strains, dedicating 33% (NT) and a marginally higher portion of their income in WA to loan obligations, with WA seeing a $600 monthly increase from the previous year.

• ACT typically commands higher incomes and smaller loan amounts compared to New South Wales.
• The Northern Territory households spend approximately 33% of their weekly income on home loan repayments and 24% on rent.

Fresh insights into market dynamics reveal an impressive 16.8% surge in first-time homeowners within the final trimester of 2023. Approximately 31,445 families forged ahead into homeownership, with the prospective buyer influx peaking in New South Wales, despite daunting affordability metrics. Nevertheless, Victoria outpaced all with both the highest count of first-time buyers and the acquisition of new home loans.

While South Australia, Tasmania, Western Australia, and the ACT enjoyed growth in homebuyer numbers, Queensland and the Northern Territory maintained consistent figures.

Published:Sunday, 17th Mar 2024
Source: Paige Estritori

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