Regional housing affordability at its best since early 2000s: HIA

The regional housing market is at its most affordable in almost a decade, according to the latest HIA-CBA Housing Affordability Index.

Overall housing affordability improved by 5.5% over the 2012 December quarter representing an 18.4% advance on the same period of 2011.

Affordability improved in all capital city and state regional housing markets with the biggest regional improvement occurring in NSW, where the affordability multiple improved from 1.43 to 1.31.

The HIA defines the affordability multiple as “the number of full time average incomes required to reach the qualifying income to service a loan on a median priced home”.

Tasmania is the most affordable regional market with a multiple of 1.13 with Hobart also the most affordable capital city market with a multiple of 1.20.

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Sydney remains the least affordable capital city housing market with an affordability multiple of 1.75.

Victoria is the least affordable regional housing market with a multiple of 1.55.

Overall, the index improved from 65.3 to 68.9 with the national affordability multiple improving from 1.53 to 1.45.

A year ago it was 1.72.

“This is the eighth consecutive quarter of increase in the index, bringing it close to levels not seen since the depths of the GFC during 2009,” says HIA senior economist, Shane Garrett.

“For regional areas, affordability is at levels last seen during the early 2000’s decade. Affordability is on the increase in every part of the country.

“This has been driven by the weakness of price developments as well as the two cash rate reductions effected by the RBA in the final quarter. Continued growth in earnings has also served to make housing more affordable”.

“It is worth noting that affordability would be even more favourable to householders had recent RBA rate cuts been passed on fully be lenders.”

Despite the continued improvement in housing affordability first-home buyer numbers remain at near record eight year lows with Garrett noting that “transactions activity on the ground is very sluggish”.

“This underlines the need for stronger interventions from the RBA in terms of interest rates and from the government with regard to the heavy taxation of home purchase,” he says.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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