Falling loan repayments and rising incomes drive biggest quarterly gain since 2016
Australia’s housing affordability improved in the March 2025 quarter, showing the first significant easing in over a year, according to new data from the Real Estate Institute of Australia (REIA).
The association’s Housing Affordability Report revealed that the share of median family income required for average mortgage repayments fell to 48%. This represents a two-percentage-point decrease compared to the previous quarter, marking the sharpest quarterly improvement since the March 2016 quarter.
The quarterly gain was underpinned by a modest 1.1% increase in national median weekly family income – up to $2,561 – and a 2.9% decline in average monthly loan repayments, now at $5,323. Lower interest rates and smaller loan sizes contributed to the drop in repayment amounts.
All jurisdictions except the Northern Territory saw improvements in housing affordability. The Northern Territory recorded a slight decline of 0.5 percentage points. Tasmania saw minimal progress, with only a 0.1-percentage-point improvement, while New South Wales and the ACT reported the strongest gains at three percentage points each.
Rental affordability also ticked up for a second consecutive quarter. The national average income share spent on rent edged down 0.2 percentage points to 24.5%. The biggest improvements were in New South Wales and Western Australia, while renters in Queensland, Tasmania and the Northern Territory faced worsening conditions.
First-home buyer activity remained stable, although seasonal trends led to a dip in numbers. There were 26,091 new loan commitments in the quarter, a 15.9% fall from the prior period but a 1% rise year-on-year. These borrowers made up 35.7% of all owner-occupier loans – unchanged from the previous quarter but slightly lower than a year ago.
According to REIA president Leanne Pilkington (pictured above), despite the report signalling some relief, it’s too early to declare a full-scale recovery in affordability, adding that interest rate stability and continued wage growth would be necessary to sustain current trends.
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