First home buyer loans fall in the ACT as national housing affordability worsens: REIA report

New loans to first home buyers in the ACT fell more than 15 per cent over the past year, the latest Housing Affordability Report from the Real Estate Institute of Australia shows.

There were 578 loans to first home buyers recorded during the March quarter, down 12.8 per cent from the previous quarter and down 15.7 per cent year-on-year.

The average first home buyer loan size also declined to $484,602 in the March quarter, a decrease of 8.1 per cent over both the quarter and the year.

The report takes into account two rate rises that happened during that period, which took the cash to 3.6 per cent in the March quarter.

Calculations from the Real Estate Institute found the average variable standard interest rate increased to 8 per cent by the end of the quarter.

First home ownership fell across the country, the report found.

The number of total first home buyer loans across the nation fell 17.9 per cent during the quarter and was 27.3 lower when compared to year prior.

Rising interest rates have also reduced overall demand for new home loans, the report found.

The total number of loans in the ACT was 1620 for the March quarter, a decrease of 20.6 per cent over the quarter and a decrease of 24.1 per cent over the past year.

Falling first home buyer numbers came as Canberra's housing affordability improved slightly over the quarter but declined over the past year.

The report, which compared data from ABS, financial institutions and internal data, found the portion of ACT households were spending 34.6 per cent of income on average loan repayments.

It was a slight improvement on the previous quarter (34.7 per cent of income) but worse than the year prior (26.5 per cent of income).

The ACT was also the only state or territory to see an improvement in rental affordability.

Real Estate Institute of the ACT CEO Maria Edwards said the ACT had "somewhat bucked the national trend".

"While volatility still remains in the market, these latest figures are a positive indicator that rent affordability is improving, providing an opportunity to promote Canberra as an attractive place to live for interstate and overseas workers who have previously been priced out of the ACT rental market," she said.

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Despite a slight improvement in housing affordability, there was still a risk investors could leave the market, Ms Edwards said.

"With speculation that interest rates will increase further it's important we look at incentives to keep investors from selling rental properties or moving to the more lucrative short-term rental market, further reducing the pool of rental properties available," she said.

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