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The latest HIA Affordability Report shows further gains in dwelling prices in the December 2016 quarter, causing sharp falls in housing affordability.
HIA senior economist Shane Garrett says housing affordability worsened by 7.3 per cent across Australia, but that there was reprieve in some regions.
“Perth experienced a further improvement in affordability and [the] report also shows how home purchase remains particularly accessible in markets like Tasmania, regional South Australia, regional Western Australia and regional parts of the Northern Territory,” Mr Garrett said.
“Nationally, housing affordability has managed to move in the wrong direction in many major cities despite the fact that interest rates are at very low levels.”
Mr Garrett said said the sluggish pace of earnings growth in the economy has impeded affordability.
“Achieving sustained improvements in affordability requires stepping back and looking at the big picture,” he said.
“Housing affordability is front and centre of everyone’s mind once more. Whilst there is no single solution, there are some key policy levers that governments could use to provide some relief.”
Affordability worsened in six of the eight capital cities during the December 2016 quarter.
The biggest deterioration occurred in Melbourne (-11.6 per cent), followed by Canberra (-10.7 per cent) and Sydney (-7.3 per cent). Affordability also worsened in Darwin (-3.8 per cent), Brisbane (-2.9 per cent) and Adelaide (-2.3 per cent).
Only Perth (+2.1 per cent) and Hobart (+1.2 per cent) saw affordability improve during the quarter.
Based on the HIA Affordability Index scores for December 2016, affordability conditions are the most challenging in Sydney (54.7), followed by Melbourne (66.0), Canberra (76.6), Brisbane (85.3) and Darwin (85.3).
By some margin, Hobart (117.8) is the most affordable capital city, while Perth (96.6) is the second most affordable capital, followed by Adelaide (93.0).
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