Affordability improves for 6th quarter running

By Terry Ryder, 24th August 2012

Affordability continues to improve, with the HIA-Commonwealth Bank Housing Affordability Index recording the sixth consecutive quarterly improvement.

And, miracle of miracles, the Housing Industry Association did not try to put a negative spin on the data.

The HIA, the voice of everyone who’s suicidal in the residential building industry, says affordability is at its healthiest level since 2003, excluding the GFC period when interest rates dropped sharply.

HIA chief economist Harley Dale says the latest result is “heartening news for Australian households”.

"Now is a great time to buy for those who are financially set to take that decision,” Dale says. Clearly the medication is working.

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The HIA-Commonwealth Bank Housing Affordability Index improved 1.1% (0.7 points) in the June 2012 quarter to be 10.6% (6.0 points) higher over the year.

The index is based on formula with three key components – incomes, prices and interest rates – and all three have been moving in the right direction recently for better affordability.

It’s the latest in a series of positive outcomes that suggest an impending improvement in real estate markets around Australia.

Interest rates are down, unemployment is low while incomes have increased steadily, sales of new dwellings are rising and there are increasing signs of prices beginning to nudge upwards in the major cities.

The only ingredient missing is confidence.

Terry Ryder

Terry is the owner and creator of hotspotting.com.au, which provides information to property investors on how to identify emerging markets before they’re common knowledge.

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