The decline in Housing affordability continued early in 2010 with higher house prices, increased interest rates, and the removal of the first home buyers’ boost according to the latest HIA-CBA First Home Buyer Affordability Report.
Housing affordability fell in the March 2010 quarter dropping by 4 per cent to be 28.7 per cent lower than 12 months ago. Through the quarter, affordability fell by 4.2 per cent in the capitals and 5.3 per cent in regional areas to be lower by 30.5 per cent and 24.8 per cent respectively compared to March 2009.
HIA Senior Economist, Mr Ben Phillips, said that further interest rate rises in April and May of 2010 will likely mean that the June quarter result will see affordability crash to the record lows experienced when interest rates were above 9 per cent in 2007.
“With the Reserve Bank insistent on further rate rises, housing affordability will once again be a key issue in the mortgage belt regions of Australia,” said Ben Phillips.
“We are yet to see the required level of co-operation between all levels of government to deliver critical housing infrastructure without hitting new home buyers,” said Ben Phillips.
“Higher interest rates, exorbitant infrastructure charges, an overly restrictive and time consuming planning system continue to fuel Australia’s affordability crisis. Overcoming these issues will go a long way towards restoring housing affordability in Australia,” said Ben Phillips.
Affordability deteriorated in most capital cities and regional areas in the March quarter. The largest falls were recorded across Victoria (-10 per cent and -15.9 per cent for Melbourne and Regional Victoria respectively), Western Australia (-6.6 per cent and -14.2 per cent in Perth and regional WA respectively) and regional New South Wales (-12 per cent).
