The HIA Affordability Index has shown a rising improvement in housing affordability in Australia, with its index rising by 1.5 per cent higher in the quarter and 2.2 per cent year-on-year.
“A trend of improving affordability is taking root in the major capital cities, due largely to falling housing prices,” commented HIA acting principal economist Geordan Murray, adding that affordability in Sydney posted the biggest improvement.
“While it remains the least affordable market in the country by quite a margin, the index is 9.0 per cent higher than a year earlier which is a significant positive step.
“The improvement in affordability has primarily been driven by the declining trend in home prices over the last year.”
He said that the analysis also shows improved affordability in Melbourne, albeit to a lesser degree than in Sydney.
“The downturn in home prices is yet to run its full course. As the price cycle progresses, affordability will continue to improve and this could be bolstered by wages growth.
“Affordability has been deteriorating over a number of decades and it will take many decades of concerned effort by governments at all levels to reduce the constraints and punitive taxes on housing that have led to the creation of the affordability challenge.”
Meanwhile, new REIWA data shows that affordability in Perth’s residential sales market improved during the September 2018 quarter, with house and unit prices softening marginally.
REIWA president Damian Collins said earlier that there was an “excellent opportunity” for buyers and investors to take advantage of current market conditions.
“While the worst of the market downturn appears to be behind us, the results of the September 2018 quarter reveal conditions are favourable for buyers and investors,” Mr Collins said.
Mr Collins said that reiwa.com data shows Perth’s median house price should settle at $505,000 for the September 2018 quarter.
“This is 1.9 per cent lower than the June 2018 quarter median and 1 per cent lower than last year’s September quarter.
“While quarterly median figures can be more subject to stock composition changes, the fact that the annual change is only 1 per cent lower suggests that we are at or near the bottom.
“It was a similar story for the unit market, with the median expected to settle at $395,000, which is 1.3 per cent lower than the June 2018 quarter and 2.5 per cent lower than the September 2017 quarter.”