A snapshot of how the GST will work

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Housing loans on the increase

May 2000

Recent figures have revealed that despite predictions of a slowdown in the housing market, the number of loans issued and the total amount lent for the purchase of homes continues to rise.

Industry analysis of home loan affordability shows record loans issued for home mortgages. The total for the December 1999 quarter was 45.7 percent higher than the previous year.

This covered the amount lent by banks, permanent building societies and other lenders - a total of $21.437 billion.

The average size of a home loan also increased by four per cent to $145,047, with the average monthly repayment rising to its highest ever level of $987, an increase of 5.5 percent.

These figures are despite a continuing decline in the Home Loan Affordability Indicator for Australia - a family income expressed as a ratio of average loan repayments.

The analysis, conducted by the Real Estate Institute of Australia, showed that the Home Loan Affordability Indicator dropped for the third consecutive quarter to a level of 38.8 percent.

The proportion of family income devoted to meeting the average loan repayment increased to 25.8 percent, up from 24.9 percent in the previous quarter.

Fears that the introduction of the GST will keep people out of the new housing market have also been somewhat allayed with the announcement of the First Home Owners' Scheme.

The Federal Government Scheme offers a grant of $7000 to first home buyers, and should provide a kickstart to the new financial year, especially at the lower end of the market.

House sales graph The grant will apply to contracts to build or buy homes signed after July 1, 2000, and will not be means tested.

HomeStart Finance predicts that the $7000 injection of funds will have a substantial effect on first home owners looking to buy in the $90,000 bracket, providing a significant contribution to their deposit.

An increase in the median weekly income across the country of 1.3 percent to $883 may also have contributed to the steady stream of Australians joining the ranks of home owners.

This information was supplied by HomeStart Finance. To find out more about HomeStart visit their web site.

This information was supplied by HomeStart Finance. To find out more about HomeStart, visit their website: www.homestartcom.au.

Real Estate in Adelaide, South Australia