Housing at most affordable since 2002
Housing is now at its most affordable level in 12 years, thanks to growth in disposable incomes, according to new research.
The HIA-CBA Housing Affordability Index for the March 2014 quarter found that affordability had improved 10.8 per cent on the year before and 2.1 per cent on the previous quarter.
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Housing Industry Association (HIA) senior economist Shane Garrett attributed the improvement to a combination of earnings growth, record-low interest rates and a slowing of home price increases.
“Increases in home prices over the past year have been significant,” he said.
“However, the impact of lower interest rates and continued earnings growth has ensured that home purchase affordability has improved over the past year for existing homeowners and those on the cusp of entering the market in the short term.”
The booming Sydney market, which one expert recently warned was at “dangerous levels”, became 1.3 per cent more affordable in the past 12 months.
The ACT posted a 17.8 per cent improvement in affordability levels, while Melbourne became 16.9 per cent more affordable and Adelaide became 10.9 per cent more affordable.
Brisbane improved by 10.2 per cent, Hobart by 8.3 per cent and Perth by five per cent.
Mr Garrett said interest rates were likely to remain low, which would help homeowner affordability to “remain reasonably favourable for the foreseeable future”.
Meanwhile, the HIA New House Affordability Index further declined in the March quarter, indicating existing houses remain relatively more affordable than new houses.