Housing is becoming even more affordable, according to the latest HIA-Commonwealth Bank Housing Affordability Index.
The index increased by 4.4 per cent in the June 2013 quarter to a level of 72.8.
HIA Chief Economist, Dr. Harley Dale said that a synchronised increase across the capital cities and non-metro areas drove the further improvement in the June 2013 quarter.
“Housing affordability in Australia is now 16.7 per cent higher than in mid-2012,” Dale said.
“These are certainly encouraging results for those entering the market at this time in the cycle.”
Dr. Dale noted that the considerable reduction in interest rates is more than offsetting recent dwelling price increases, but warned that genuine structural improvements to affordability are contingent on a stock of housing supply that grows commensurately with the population and its housing needs.
In the June 2013 quarter the HIA-CBA Housing Affordability Index increased in all seven capital cities reported.
The strongest quarterly increase occurred for Brisbane with a rise of 10.4 per cent, followed by Hobart (10.0 per cent), Adelaide (7.7 per cent), Canberra and Perth (4.1 per cent), Sydney (3.3 per cent) and Melbourne (2.2 per cent).
Outside the capital cities, affordability improved in the June 2013 quarter in all six non-metro regions reported.
The strongest quarterly increase was for regional Queensland with a rise of 9.6 per cent, followed by the non-metro areas of Tasmania (8.1 per cent), South Australia (7.7 per cent), Victoria (5.3 per cent), Western Australia (4.5 per cent), and New South Wales (2.9 per cent).
Given the importance of adequate new housing supply to avoid pressure on existing dwelling prices, the HIA-CBA Affordability Report is now tracking new detached house prices relative to established detached house prices.
This provides an indication of the affordability of new houses relative to established houses and consequently the progress different markets are making in addressing overall housing affordability.
“A relative new house affordability advantage has emerged for Sydney and Western Australia in recent quarters”, Dale said.
“These are the areas of Australia where, not coincidentally, a clear new home building recovery is underway,” he added.