Housing affordability continued to improve in the June 2013 quarter, according to the Housing Industry Association (HIA)
The HIA-Commonwealth Bank Housing Affordability Index increased by 4.4 per cent in the June 2013 quarter to a level of 72.8.
HIA chief economist Dr Harley Dale said housing affordability is now 16.7 per cent higher than in mid-2012.
“The considerable reduction in interest rates is more than offsetting recent dwelling price increases,” he said.
According to Dr Dale, the improvements are cyclical rather than structural.
“Current improvements in housing affordability do not represent structural shifts in Australia’s affordability; rather, they represent the dominant impact of cyclical changes in lending rates which will of course be prone to reversal at some point,” he said.
Dr Dale said genuine structural improvements would require the stock of housing supply to grow commensurately with the population and its housing needs.
“Policy reform, led by the federal government, needs to be implemented to drive a sustained improvement to residential construction so as to genuinely address the housing affordability challenge in Australia,” he said.
In the June 2013 quarter, the HIA-CBA Housing Affordability Index increased in all seven capital cities. The strongest quarterly increase occurred for Brisbane, with a rise of 10.4 per cent, followed by Hobart (10.0 per cent), Adelaide (7.7 per cent), Canberra and Perth (4.1 per cent), Sydney (3.3 per cent), and Melbourne (2.2 per cent).
Written by Michael Masterman in TheAdviser.