Housing Affordability at it’s best in 12 years!
Record low interest rates have helped drive the Housing Affordability index to it’s most favourable level in 12 years during the March 2014 quarter.
HIA Senior economist Shane Garrett said, “The continuation of record low interest rates, combined with decelerating house price growth and growth in income earnings over the quarter saw the HIA-CBA Housing affordability index improve to it’s most favourable level since March 2002.
The Commonweatlh Bank index improved by 2.1 per cent during the first quarter of 2014 and affordability is now 10.8 per cent more favourable than a year ago.
Increases in home prices over the past year have been significant. However the impact of lower interest rates and continued income growth has ensured that home purchase affordability has improved over the past year for existing home owners and those on the cusp of entering the market in the short term.
The RBA has indicated that it intends to leave interest rates on hold for quite a while yet. We’re very unlikely to see an increase in rates for the remainder of this calendar year. As such affordability will remain favourable for the foreseeable future.
We need to ensure adequate and affordable housing remains out there as a dream for those that still wish to enter the market over the next few years. This falls on all levels of Government to ensure the supply of housing continues so that we don’t see a shortage of supply, which in turn will increase prices.