By Guest Blogger, Andrew Bell, Chairman, Ray White Bell Group
Chairman | The Ray White Surfers Paradise Group
QLD Board Member | Real Estate Institute of Australia
The Real Estate Institute of Australia’s Housing Affordability Report for the March Quarter 2025 gives us some great insights into the current real estate market and some insights into what lies ahead which is important for all buyers in the market place today.
The report shows that over the quarter, Australian Housing Market Affordability improved for the first time in 12 months. The average loan repayment now amounts to 48.0% of the median family income, an improvement of 2.0 percentage points over the quarter, but a decline of 1.0 percentage point over the year. This is the greatest quarterly improvement in housing affordability since the March quarter of 2016.
The report also shows that rental affordability improved again over the quarter nationally, the proportion of income required to meet median rent decreased 0.2 percentage points over the quarter to 24.5%. Whilst rental affordability improved in New South Wales, Victoria, Western Australia and the Australian Capital Territory, it declined in Queensland, Tasmania and the Northern Territory.
As first home buyers are so significant in the housing market, we see that the number of first home buyers decreased in all states and territories over the quarter, but increased in all states and territories (except New South Wales and Western Australia) over the past year. Victoria had the largest number of first home buyers in the March quarter (8,439) and the Northern Territory had the smallest number (222). First home buyers accounted for 35.7% of all owner occupier dwelling loan commitments made during the March quarter, and the average loan size to first home buyers decreased to $542,356.
In terms of borrowings, we see owner occupiers made 72,991 new loan commitments during the March quarter 2025 which is 16% less than the previous quarter, but this trend is not unusual in the March quarter of each year; however, by comparison, the number of borrowers was up 4.1% over the March quarter of the previous year.
The total number of loans for owner occupiers increased in all states and territories over the last year, with the average loan size decreasing by 0.9% over the March quarter to $659,921 which was an increase of 8.3% over the past 12 months.
As mentioned, the March quarter saw the largest quarterly improvement in housing affordability since March 2016. We can attribute this improvement to two factors. The first being rising median family incomes, which now sit at $2,561 per week, 1.1% above the last quarter and 4% higher than last year. The second contribution to the housing affordability improvement of course was interest rate cuts which saw a 2.9% decrease in the average loan repayment, now at $5,323 per month.
Whilst all of the above was encouraging, the reduction in interest rates that we’re seeing has already resulted in increasing buyer activity in the market place with most agents across the country reporting higher numbers attending open homes and people moving faster to make offers on properties. With further interest rate drops expected in the second half of 2025 it is likely to
increase competition for properties in the market place and as such we are likely to see price rises which will ultimately result in housing affordability.
As interest rates continue to soften and competition heats up, making an informed move has never been more critical. At Propertybuyer, we help clients navigate the market with confidence so you can capitalise on these conditions before they change.
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