Housing Affordability Continues to Surge – good news for home buyers & property investors

I know some property pessimists say housing is unaffordable. Now I know it’s expensive, but affordability has increased for the 8th consecutive quarter driven by earnings growth, interest rate cuts and weak price developments.

The HIA-CBA Housing Affordability Index increased by 5.5 per cent in the December 2012 quarter, representing an 18.4 per cent advance on the same period of 2011.

“This is the eighth consecutive quarter of increase in the index, bringing it close to levels not seen since the depths of the GFC during 2009,” said HIA Senior Economist, Shane Garrett.

“For regional areas, affordability is at levels last seen during the early 2000’s decade. Affordability is on the increase in every part of the country,” added Shane Garrett. “This has been driven by the weakness of price developments as well as the two cash rate reductions effected by the RBA in the final quarter.

Continued growth in earnings has also served to make housing more affordable”.

“It is worth noting that affordability would be even more favourable to householders had recent RBA rate cuts been passed on fully be lenders,” commented HIA Senior Economist Shane Garrett. “Despite the relative attractiveness of house purchase implied by these figures, transactions activity on the ground is very sluggish. This underlines the need for stronger interventions from the RBA in terms of interest rates and from the government with regard to the heavy taxation of home purchase”.

The HIA-CBA Housing Affordability Report recorded improved affordability in all seven capital city indices as well as improvements in the six indices tracking the non-metro regions of each state. (Note: Northern Territory is not included in the analysis)Housing AffordabilityMarch2013




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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

'Housing Affordability Continues to Surge – good news for home buyers & property investors' have 3 comments


    March 25, 2013 opinder

    Thanks a lot Michael for the reply..

    You are right I had a valuation done on one of the property and I was shocked as to what the valuer came up with and when challenged he said No recent sales thats why..
    But surprisingly desktop valuations came out really impressive..

    But Once again Thanks to you Michael..Have a great one



    March 25, 2013 opinder

    Hi Michael,
    Nice article..Could I please ask you a general question.
    Are bank valuations done by a valuer represent true value of the property..I mean in other words market value of property.
    Thank You very much


      Michael Yardney

      March 25, 2013 Michael Yardney

      No – bank valuations do not always represent the “market price” you could achieve if you sold a property.
      In particular when valuers put a “value” on your existing property for equity release, I’ve found them to be very conservative over the last few years


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