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 Number of home loans issued jumps 25 per cent in a year ... as home loan affordability remains stable19 December 2001 The number of home loans issued in Australia during the three months to September 30, 2001 increased by almost 25 per cent over the number of loans during the same period last year, according to the AMP Banking/REIA Home Loan Affordability Report issued today. State-by-State round-up
Almost 126,000 home loans, valued at more than $19 billion, were issued between June and September 2001. This was around 25,000 more loans than were issued at the same time last year, with a total value then of more than $13 billion, around $6 billion lower.
The AMP Banking/REIA Home Loan Affordability Indicator is the ratio of family income to average loan repayments, with an increase denoting easier affordability. Median house prices in Melbourne continued to grow during the quarter and are now almost at the same level as Sydney median house prices. Melbourne house prices increased by 7.6 per cent over the quarter to $313,000 and by around one third (33.2 per cent) over the year. The next most impressive increase in median house prices was in Canberra, where house prices increased by 6.9 per cent for the quarter to $217,000 and by 22.4 per cent for the year. Head of Retail Banking for AMP Banking, Mr Michael Guggenheimer, said the big increase in home lending was partly due to suppressed demand in September 2000, following the introduction of the New Tax System, and partly due to the significant interest rate cuts since then. "The total number of home loans issued in September 2000 was the lowest number of loans issued at any time in the last five years. The numbers in September 2001 are a big improvement but are still well short of the high levels of activity recorded in 1999. "Interest rates in September 2001 were around 1.2 per cent lower than in September 2000. Further interest rate cuts in October and December have taken another half per cent off standard variable rates, which are now as low as they have been at any time since the 1960s," Mr Guggenheimer said. President of the Real Estate Institute of Australia (REIA), Mr Michael Davoren, said lower interest rates and the Federal Government's home buyers schemes continue to support demand for housing.
"Sydney remains generally stable, but markets in Melbourne, Canberra, Brisbane, Adelaide and Hobart continue to grow strongly, which indicates that demand across the nation is still strong," Mr Davoren said. AMP's Chief Economist, Dr Shane Oliver, said low interest rates were likely to be a feature of the economy for some time to come. "While the Australian economy has been protected from recession, the biggest risk remains on the global front with conditions in major economies only starting to improve slowly from around June, 2002. With global inflation is now set to fall further we are likely to be in for an extended period of low interest rates through 2002," Dr Oliver said. The AMP Banking/REIA Home Loan Affordability Report is based on data from all major lending institutions and is the most comprehensive and accurate assessment of Australians' ability to meet the cost of buying a home. State-by-State round-upNew South Wales - home loan affordability remains high as property prices remain stable Median house prices in Sydney fell by 0.3 per cent to $315,000, but 1.6 per cent higher than median house prices at this time last year. Meanwhile, the size of an average home loan increased by 3.5 per cent to $185,354 and average monthly loan repayments increased by 2.6 per cent to $1,262. Meanwhile, median weekly family income grew by just 1.4 per cent to $989, so the proportion of family income required to meet loan repayments increased marginally to 29.4 per cent. While this meant a 1.3 per cent deterioration in the AMP Banking/REIA Home Loan Affordability Indicator over the quarter, it was still 2.3 per cent better than at this time last year and still the second best affordability figures since September 1999. Victoria - house prices continue to soar as affordability declines Melbourne median house prices grew to $313,000 - 7.6 per cent in three months and by nearly one third - 33.2 per cent - over the year. Melbourne median house prices are now almost on par with Sydney median house prices. The size of the average home loan increased during the quarter by 5.1 per cent to $153,475 and the number of home loans issued continued to increase, up by 6.3 per cent to 28,788 - almost 23 per cent higher than at this time last year. Although interest rates decreased, average monthly loan repayments increased by 4.3 per cent to $1,045, while median weekly family income increased by just 1.8 per cent to $972. Consequently, the proportion of family income required to meet the average mortgage repayment increased from 24.2 per cent to 24.8 per cent and home loan affordability declined by 2.4 per cent over the quarter and 3.3 per cent over the year. Queensland - home loan affordability remains stable as house prices climb Home loan affordability remained stable in Queensland during the three months to the end of September, while Brisbane house prices increased by 2.8 per cent for the quarter and 13.5 per cent for the year. While the value of the average home loan increased by 1.2 per cent to $132,482, average loan repayments increased by just $4 - or 0.5 per cent - to $902. Growth in median weekly family income was just as meager, with a 0.6 per cent increase to $905. Overall, the proportion of family income devoted to average loan repayments remained unchanged and home loan affordability remained stable. South Australia - house prices rocket by nearly 20 per cent and home loan affordability remains stable At $152,500, Adelaide median house prices increased by 2.9 per cent in the three months to September 2001 and by nearly 20 per cent over the year. However, the number of new home loans issued climbed by only 0.6 per cent to 9,642, with an average size of $111,827. While this was just 1.5 per cent higher than in the June 2001 quarter, it was almost 16 per cent higher than September 2000, when the average loan size was $96,466. Median weekly family income barely changed during the quarter but average monthly loan repayments grew by $5 - or 0.7 per cent - to $761. Consequently, the proportion of family income devoted to meeting the average loan repayment increased by 0.1 per cent to 21 per cent, which meant a tiny decline in home loan affordability for the State. Western Australia - marginal improvement in home loan affordability Median house prices in Perth improved by 1.4 per cent to $168,000 in the three months to September 2001, and by 7.3 per cent for the year. While the average home loan size grew by 1.5 per cent to $130,436, average monthly loan repayments increased by $8 - just 0.7 per cent - to $888. Meanwhile, median weekly family income increased by 1.0 per cent to $959 and the proportion of family income devoted to monthly loan repayments remained unchanged at 21.4 per cent. The overall effect was for a small increase in home loan affordability over the quarter. Tasmania - home loan affordability remains high Hobart median house prices increased by 2.2 per cent to $123,000 over the quarter ended June 30, and by 13.9 per cent for the year. The average size of a home loan increased by 4.8 per cent to $85,503 and average monthly loan repayments grew by 4.0 per cent to $582. Median weekly family income, though, remained almost unchanged at $749, which increased the proportion of family income devoted to average loan repayments from 17.3 per cent to 17.9 per cent. Consequently, home loan affordability declined in Tasmania during the quarter, but was still an improvement on affordability levels a year ago. Northern Territory - home loan affordability falls but still the best in the nation The Northern Territory's home loan affordability indicator remained the strongest in Australia, despite a 3.4 per cent decline over the three months to September 2001. Median house prices in Darwin decreased by 1.1 per cent over the quarter to $185,000, but were still 2.8 per cent higher than at this time last year. The average loan size increased during the quarter by 2.9 per cent to $116,454 and average monthly loan repayments increased by 2.1 per cent to $793. Meanwhile, median weekly family income decreased by 1.4 per cent and the proportion of family income devoted to average loan repayments increased from 13.7 per cent to 14.8 per cent. The impact was a 3.4 per cent decline in home loan affordability for the quarter, but it is still 9.6 per cent better than at the same time last year. Australian Capital Territory - affordability remains steady as house prices rocket ACT median house prices continued their steady increase during the three months to September 30, 2001, with a 6.9 per cent increase during the quarter to $217,000 - a 22.4 per cent increase on prices at this time last year. The average size of a home loan in the ACT increased by 3.3 per cent to $149,471, and average monthly loan repayments increased by 2.5 per cent to $1,586. Median weekly family income also increased, but only by 1.9 per cent. The proportion of family income devoted to average loan repayments grew marginally and this had a slightly negative effect on home loan affordability for the quarter, although home loans in the ACT are still more affordable than at this time last year. Source: AMP Bank/Real Estate Institute of Australia Home Loan Affordability Report, December 2001.
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While the size of an average home loan increased by three per cent during the
three months from June to September 2001, lower interest rates meant average monthly loan
repayments did not grow at the same rate. Meanwhile, median weekly family income grew by
1.2 per cent during the quarter. Overall, the AMP Banking/REIA Home Loan Affordability
Indicator fell by less than one per cent, but remained at the third highest level since
September 1999. 
"The continuing stability of home loan affordability should
be encouraging news for home owner occupiers and investors. 
