The latest HIA-Commonwealth Bank Housing Affordability Index showed a further rise in the June 2012 quarter marking the sixth consecutive quarter of improvement.
And while this is good news for home owners and property investors and puts another nail in the coffin of property doomsayers, it doesn’t mean property prices are going to rise. While property may be affordable most people are still a little nervous and until market sentiment improves I can’t see a major movement in our overall property markets.
Best affordability for years.
“Excluding the GFC period when interest rates dropped sharply, housing affordability is at its healthiest level since 2003,” said HIA Chief Economist, Dr Harley Dale. “That is heartening news for Australian households.”
“Now is a great time to buy for those who are financially set to take that decision,” Harley Dale said.
“The recent improvement in affordability is welcome news for those trying to get a foothold into or advance within the housing market,” said Harley Dale. “It is also an encouraging bright spot for an industry that, in terms of current activity, remains a clear area of weakness within the Australian economy.”
“The improvement in housing affordability is largely cyclical and there remains considerable work to be done to address the high and inefficient taxation embedded in housing, especially for new homes. Policy reform remains very slow, to the detriment of households, businesses, and overall economic performance,” added Harley Dale.
Melbourne and Brisbane were the only two capital cities to record a deterioration in affordability in mid 2012. Outside of the capital cities, affordability improved everywhere except South Australia and Western Australia.
As Michael Matusik so eloquently put it at our recent Brisbane seminar – property is affordable but undesirable.
Increasing affordability, higher rents and an undersupply of dwellings will underpin our property markets and ensure the cycle moves on.
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