Housing affordability improved 2.7% during the March quarter, according to the Housing Industry Association‘s Affordability Report. In addition, this was 0.4% more favourable than for the same period last year.
According to the HIA the national median dwelling price fell during the March 2016 quarter and this was the main reason behind the improvement in affordability. Without the shock increase in variable mortgage interest rates late last year, the improvement in affordability would have been even better.
Don’t count your chickens just yet, as the HIA expects the affordability improvements to be short lived. Continued low interest rates mean house prices are likely to keep rising this year, at least at a more sustainable pace.
How do the states stack up?
The largest improvements in affordability were in Sydney +8.9%, Perth +4.9%, and Darwin +4.4%. In Melbourne, affordability improved +2.0%. Affordability worsened in Brisbane (-2.1%) and Canberra (-0.3%).
The affordability index is calculated by examining house prices, mortgage rates and wages growth to determine the proportion of homeowners’ income being spent on mortgage payments.
For the latest property market news visit the blogs section of the Naked Real Estate website.