The survey, which is released by the Housing Industry Association, showed the continuation of record low interest rates, combined with falling house prices and a growth in earnings over the quarter, led to the index showing the most favourable conditions for housing affordability since March 2002.
Specifically, the index rose 2.1 per cent during the first quarter, making affordability 10.8 per cent more affordable than it was a year ago.
While there has been strength in property prices, the impact of lower interest rates along with continual earnings growth has meant affordability has improved over the past year.
The HIA-CBA Index showed that in the March 2014 quarter, affordability improved in two of the six surveyed capital cities – Sydney and Perth - while remaining unchanged in Melbourne. Affordability deteriorated in Brisbane, Hobart and Adelaide.
The index measures a number of factors, not just house prices. But the results mean first-home and existing buyers considering a new purchase, may be in a better position to buy than they would have been a year ago – especially as the Reserve Bank of Australia has indicated rates will stay low for some time.
However, while rates have been earmarked to remain unchanged in the short term, it is believed that at some point the RBA will need to lift them, with expectations for this happening at least by the middle of 2015.
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