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Despite rising home values, housing affordability continues to improve, according to the Housing Industry Association (HIA).
The HIA-Commonwealth Bank housing affordability index increased by 3.2 per cent in the September 2013 quarter, to a level of 75.1.
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HIA senior economist Shane Garrett said recent interest rate cuts had more than offset house price increases, the net effect being improved affordability.
“Since late 2011, the RBA has cut rates by a total of 225 basis points, including reductions in both May and August of this year. As a result, the discounted variable interest rate for mortgages has declined from 7.05 per cent to 5.18 per cent over the same period,” Mr Garrett said.
“Despite widely-publicised dwelling price increases in some markets in recent months, affordability has continued to improve as a result of reduced interest rates.”
The aggregate capital city affordability index reached 72.2 in September, an increase of 2.6 per cent for the quarter, and 15.2 per cent for the year.
Outside the capital cities, affordability improved in four of the six non-metro regions reported on, with the strongest quarterly improvement in regional Victoria, which saw a rise of 5.1 per cent.
Non-metro areas of Queensland, New South Wales and Western Australia also increased, while regional Tasmania and South Australia saw a decrease in affordability.
Mr Garrett also noted improved wages as a driver of increased affordability.
“Affordability has been further enhanced by continued increases in weekly earnings over the past year,” he said.
