Low interest rates have made housing affordability the best since 2002, a report shows.
Housing affordability is the best it’s been in over a decade thanks to low interest rates and easing home price rises.
Affordability is at its most favourable level since March 2002, according to the Housing Industry Association/Commonwealth Bank Housing Affordability Index released on Wednesday.
Affordability in the March quarter was 10.8 per cent more favourable than a year ago, HIA senior economist Shane Garrett said.
That was due to low interest rates, earnings growth and a deceleration of home price increases, he said.
“Increases in home prices over the past year have been significant,” Mr Garrett said.
“However, the impact of lower interest rates and continued earnings growth has ensured that home purchase affordability has improved over the past year for existing home owners and those on the cusp of entering the market in the short term.”
The figures showed affordability had improved in Sydney and Perth but deteriorated in Adelaide, Hobart and Brisbane and remained flat in Melbourne.
Affordability was more favourable for existing houses than new ones but Mr Garrett said affordability was expected to continue improving.
“The Reserve Bank of Australia has signalled that interest rates are set to remain low for some time,” he said.
“As home price pressures ease off, we expect home owner affordability to remain reasonably favourable for the foreseeable future.”