Australia’s Housing Industry Association (HIA) reports that affordability is improving thanks to increases in earnings, more accessibility to lending and an easing in residential real estate prices. The HIA-Commonwealth Bank Housing Affordability Index improved by 6.4% in March, marking an 11% increase on the year. Experts expect even more improvement throughout 2012, although calls for government reform are still echoing in markets around the country. While affordability is improving on the whole, prospective buyers in Sydney and Perth are not enjoying the benefits. For more on this continue reading the following article from Property Wire.
Housing affordability is continuing to improve in Australia with the HIA-Commonwealth Bank Housing Affordability Index in the March 2012 quarter showing improvement for the fifth quarter in a row.
Conditions are beginning to tilt back in favour of those trying to enter the residential property market, according to the Housing Industry Association, the voice of Australia’s residential building industry.
The HIA-Commonwealth Bank Housing Affordability Index improved by 6.4% in the March 2012 quarter and is now 11% higher than a year ago.
‘In the March quarter we observed a modest increase in earnings, a modest decline in lending rates and a softening in the median dwelling price, so all factors moved in a direction which improved housing affordability,’ said HIA’s senior economist, Andrew Harvey.
‘Cuts to the RBA cash rate totalling 50 basis points in late 2011 should have provided a much larger boost to affordability in the quarter but the impact was eroded as lenders widened the margin between mortgage rates and the cash rate. After accounting for the wider margins, the average mortgage rate during the March quarter was only 13 basis points lower than in the December quarter,’ he explained.
‘Those trying to get a foothold into the housing market will welcome the recent improvement in affordability, and we should see further improvement in coming quarters as the May rate cut flows through,’ he pointed out.
‘However, we should be mindful that much of the recent improvement in affordability is driven by a cyclical softening in the economy and in house prices. Structural issues which dramatically push up the cost of housing, including high taxes, still need to be addressed and reformed,’ he added.
Sydney and Perth both recorded deteriorating affordability in the March quarter of 2012 with their indices falling by 1% and 1.8% respectively. Affordability improved in the remainder of Australia’s capital cities with Melbourne up by 7.3%, Brisbane up by 6.3%, Adelaide up by 7.3%, Hobart up by 3% and Canberra up by 7.1%.
Outside of the capital cities, affordability improved in all states with the exception of Victoria which was unchanged. Affordability in non-metropolitan New South Wales was up by 2.4%, Queensland was up by 4.5%, South Australia was up by 6.4%, Western Australia was up by 8.7% and Tasmania was up by 0.4%.
This article was republished with permission from Property Wire.