News and Announcements

Housing affordability March update

29 June 2010

Author: REIV

Housing affordability has diminished across Australia over the last year, with Victoria recording one of the most significant changes, according to the Real Estate Institute of Australia’s March Housing Affordability Report.

In the March quarter last year, 27.6 per cent of a family income was required to meet average loan repayments; following increases in house prices and interest rates, it increased by seven per cent to 29.5 per cent in the December quarter, and then 10.5 per cent to 32.6 per cent in the March quarter this year.

There are only two states in which a higher proportion of the family income is required: in New South Wales, where the average is 34.5 per cent; and in Queensland, where it is marginally higher at 33 per cent.

The primary reason for the reduced affordability is the average loan and the average loan repayment has increased.

One year ago the average loan was $259,559 and the repayment was $1620 per month. In the most recent quarter the average loan was $297,813 and the repayment was $2018 per month.

The increase in the cost of repayments of $398 per month outstrips the increase in the median family income of $338 per month.

The underlying reason for the worsening affordability in Victoria is a lack of homes to meet the needs of our growing population. The National Housing Supply Council has said that Victoria has 22,700 fewer homes than was required in 2009, and that the problem of diminishing affordability was unlikely to change until supply either equals or exceeds demand.

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Auction preview 15th and 16th May

12 May 2010

Author: REIV

• Last weekend: 871 auctions, clearance rate of 76 per cent.
• This weekend last year: 451 auctions, clearance rate of 83 per cent.
• This weekend 2008: 578 auctions, clearance rate of 64 per cent.

Comment

The REIV is expecting around 700 auctions this weekend followed by 800 next weekend and around 950 in two weeks time.

The cumulative impact of 6 interest rate increases, concerns about affordability and more significantly the very high number of auctions were significant factors behind last weekend’s lower than average clearance rate.

As it was only the second time in the last twelve months that the clearance rate fell below 80 per cent it’s not clear yet if this the start of a more stable and sustainable market or just a once off, that will be clearer at the end of May.

What is clear is that the high number of auctions in May has shifted, by a small degree, the balance in the residential property market back towards buyers.

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Improving the energy efficiency of our homes

24 February 2009

Author: REIV

Environmental efficiency of residential property is an issue being closely examined by the property profession and the state and federal governments.

An enormous opportunity exists to significantly reduce Victoria's carbon emissions.

At present new dwellings in Victoria must comply with the five-star standard. This requires a five-star energy rating for the building fabric, water-saving measures, and the installation of either a rainwater tank or solar hot-water service.

New dwellings comprise a small percentage of the housing stock, therefore the challenge is how to lift the energy rating of existing houses.

In Victoria a range of subsidies are available for property owners to install energy and water-saving devices. The Federal Government's program to insulate 2.7 million homes will provide further impetus to the overall goal of carbon reduction.

The real challenge is implementing a reporting system that will allow prospective buyers to easily understand and compare the energy efficiencies of different properties.  Currently, before a buyer signs a contract of sale, the vendor must provide a statement (often referred to as a Section 32) of matters affecting the land to be sold.

The REIV is working with a range of stakeholders to determine whether Section 32 should contain environmental ratings and what standards the ratings should be set at, or if another means for reporting a house's environmental standard can be introduced.

It's only a matter of time until we move to a more transparent system of energy rating for residential houses.

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