Housing affordability improves in all capitals but Brisbane

Perth has registered the biggest improvement in housing affordability among capital cities over the June quarter, according to the HIA-Commonwealth Bank Housing Affordability Index. 

Housing affordability improved by 3.2% in the WA capital, which led a 0.8% improvement nationally over the quarter. 

Perth was followed by Sydney (2%), Melbourne (1.9%), Hobart (1.5%), Canberra (1%) and Adelaide (0.2%) 

Brisbane was the only capital city where affordability declined, falling by 2.7%. 

Outside of the capital cities, affordability improved in the non-metropolitan regions of New South Wales (3%), Victoria (2%), and Western Australia (2.5%), but deteriorated in South Australia (-0.4%) and Tasmania (-3%). Non-metropolitan Queensland did not register any change in affordability during the quarter.

The national improvement took the Affordability Index to a level that is 7.2% above the level registered in the June 2010 quarter. 

“Earnings growth and a small decrease in mortgage lending rates worked to improve housing affordability over the June 2011 quarter. These factors more than offset a small increase in the median house price,” says HIA’s senior economist, Andrew Harvey. 

The HIA says it was predominantly global economic uncertainty that led to this improvement in Australian housing affordability. 

The RBA kept rates on hold during the quarter and improved conditions for Australian banks in wholesale lending markets facilitated a slight lowering of mortgage lending rates, it says. 

In addition, average weekly ordinary time earnings posted respectable growth of 1.2% in the quarter, equivalent to an annualised rate of 4.8%, the HIA says.