Housing affordability is improving across most Australian capital cities, helped by recent falls in property values. The Australian Housing Industry Association’s (HIA) Affordability Index rose by 0.2% in the March quarter, largely reflecting price declines in Sydney.
“Affordability improved in most of Australia’s capital cities during the first three months of 2018 as house price pressures eased,” said Shane Garrett, Senior Economist at the HIA. “Affordability in Sydney improved by 1.9% as a result of the reduction in dwelling prices over the past six months, while in Melbourne the outcome was largely unchanged as price growth remains solid.”
Garrett says that despite the improvement, housing affordability still remains very challenging in the larger capital cities.
The HIA Affordability Index takes into consideration movements in dwelling prices, mortgage interest rates and wage developments over a given quarter. Importantly, it does not take into account deposit requirements, something that has prohibited many first home buyers from entering the housing market.