ACT is the most affordable state or territory to buy property

The ACT is still the most affordable state or territory in which to buy or rent a home, according to a new report by the Real Estate Institute of Australia.

The result comes despite a nationwide decline in housing affordability based on the proportion of household income required to meet mortgage repayments.

REIA’s Housing Affordability Report (December quarter 2015) has found that Canberra families spend an average 19.9 per cent of their income on mortgage repayments.

This represents an annual improvement with the figure falling from 20.4 per cent. It’s about half the income percentage NSW home owners put towards their mortgage repayments – a staggering 39.4 per cent.

Real Estate Institute of ACT president Frank Pompeani said the ACT result was not surprising.

“We’ve come out of a fairly subdued market,” Mr Pompeani said.

“Prices are just starting to trickle up and you can still buy good affordable housing for under $500,000 in the suburbs.”

Consumer advocate at finder.com.au Bessie Hassan agreed that the ACT’s cooler market would have contributed to the result. She said it was welcome news for residents of the capital with “mortgage stress” becoming a problem for some of Australia’s states.

“Mortgage stress refers to the scenario of monthly mortgage repayments making up 30 per cent or more of your income, with this figure being an industry-wide adoption,” Ms Hassan said.

While most of us wouldn’t mind paying a little extra on a mortgage if it means we get to own our dream home, mortgage stress is a very real problem in Australia and it’s slowly getting worse.”

According to the report, the nationwide average was 32.4 per cent. 

Independent Property Group’s director of project marketing Wayne Harriden said benefits for ACT first home buyers also helped make housing more affordable in the capital.

He said a lower entry point and good supply of affordable units helped first home buyers take the first step on the property ladder.

Mr Harriden said a number of local developers have helped to make housing more affordable by offering savings programs and low deposits. For example, some off-the-plan developments allow buyers to make a small holding fee before giving them 12 months to save for a 5 per cent deposit.

He said this gave first home buyers the motivation and commitment to start saving.

“Developers have created an opportunity that didn’t exist before by offering this incentive,” Mr Harriden said.

“One of the hardest parts for first home buyers can be getting a deposit together and the problem is they’re paying rent at the same time.”

The report also noted that the ACT led the pack for rental affordability. The proportion of income required to meet the median rent sat at 16.8 percent. NSW was again the least affordable with a result of 27.9 per cent in the same category.