Budget Paper No5 Northern Territory Economy 1998/99
Tabled Paper 382
Tabled papers for 8th Assembly 1997 - 2001; Tabled papers; ParliamentNT
Tabled by Michael Reed
Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.
HOME LOAN AFFORDABILITY A little under one third of all households in the Territory are buying their home, a similar ratio to elsewhere in Australia. The level of home loan affordabil i ty in December 1997 as measured by the Citibank/REIA Home Loan Affordability Indicator is shown in Figure 11.5. This indicator represents the ratio of median family income to the average loan repayment. Home loan affordability rose in all jurisdictions over the eighteen months to September 1997. However, in December 1997, affordability dropped in NSW, VIC, QLD and ACT under the impact of rising house prices and slowing interest rate falls. Affordability continued to rise in the Territory in the December quarter 1997, with average repayments continuing to fall. The Territory continued to have the second most affordable home loans in Australia after the ACT - a rank held since March 1995. Home loans in the Territory are substantially more affordable than in any jurisdiction other than the ACT. This high affordability reflects the fact that high median family income in the Territory more than compensates for relatively high housing costs. The rapid escalation in land prices in Alice Springs has caused affordability to decline markedly over the last decade and has made residential land in Alice Springs the second least affordable amongst similar sized towns around Australia. This rapid escalation in prices reflects the shortage of residential land to meet the lower end of the market as a result of the Native Title claim. In December 1997 17.2% of median family income was required to meet average mortgage in the Territory, down from 20% a year earlier. This compares favourably with the national figure of 23.3%. Over the twelve months to December 1997, home loans have become more affordable in the Territory as a result of the 2% reduction in the standard variable home loan interest rate. This fall in home loan interest rates has reduced the average monthly loan repayment in the Territory from $974 in December 1996 to $844 in December 1997. Over the same period median house prices in Darwin rose by $17 000. While there was a 2.5% increase in the size of the average loan in the Territory, median weekly family incomes showed almost no growth. PUBLIC HOUSING After investing significant resources in housing stock following Self-Government in 1978, the Territory Government is gradually withdrawing from the housing industry. This has increasingly allowed the private sector to meet the demand for additional housing. 67 Housing and Construction 0 10 20 30 40 50 60 70 ACT NT Tas SA WA Vic Qld Aust NSW Ratio Figure 11.5 HOME LOAN AFFORDABILITY Source: CitiBank/REIA, Dec Quarter 1997
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