Low home mortgage rates drive affordability
Cheap home loans are one factor contributing to improving affordability, according to the Housing Industry Association (HIA)-Commonwealth Bank Affordability Report for the March quarter.
The HIA-CBA Housing Affordability Index moved upwards by 2.1 per cent during 2014's first quarter.
This places the index for the March quarter 10.8 per cent higher than the 2013 March quarter.
Good news for home buyers
Australian housing affordability is now at its best level since the 2002 March quarter, the report noted.
This news will be welcomed by those looking to sell their existing home in order to upgrade to a larger property or live in a nicer suburb.
Loan interest rates were a key factor in improving housing affordability.
"Across Australia, affordability has improved fairly steadily since reaching its most unfavourable level during mid-2010. Since that time, affordability has improved by about 45 per cent, largely due to much lower interest rates, growth in earnings, and relatively muted home price inflation over the past four years," the report explained.
Where to buy
If you're wondering where to buy, it could be worth paying attention to the figures from the report.
Housing affordability improvements in Canberra were incredibly strong, with a 7.7 per cent increase quarter-on-quarter. Affordability in Sydney increased by 2.2 per cent, while Brisbane, Melbourne and Perth affordability was consistent with the December 2013 quarter.
Regional Western Australia could also be a good bet if you're looking to buy, with housing affordability improving by 2.8 per cent quarter-on-quarter.
In regional New South Wales the figure was 1.3 per cent, while regional South Australia recorded a 0.3 per cent increase.
"The fact that affordability continues to remain relatively favourable in the context of strong home price growth emphasises the importance of mortgage interest rate reductions and continued growth in earnings in providing a cyclical boost to affordability," the report stated.
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