Canberra has recorded the strongest improvement in housing affordability of all the capital cities, new data shows.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Housing Industry Association Commonwealth Bank Affordability Report shows the ACT’s affordability increased 7.7 per cent in the March quarter.
It is the most favourable result in the past 14 years for the territory. Sydney was second strongest, with an increase of 2.2 per cent.
Canberra is considered the second most affordable capital city housing market after Hobart.
The report shows housing affordability in the ACT is now 17.6 per cent higher than in the March quarter last year.
The huge increase on the Housing Affordability Index follows the first decline in affordability in about three years, recorded in the December quarter.
The report says as well as the reduction of mortgage interest rates to record low levels over the past year, the ACT market has seen earnings creep up by 1.7 per cent.
“This is despite the program of Commonwealth government cut-backs, which have had a disproportionately large impact on the ACT economy,” it said.
The report said the acceleration in home prices across much of Australia over the past year had bypassed the ACT market, with the “government budgetary situation contributing to falling home prices in the territory”.
“All of these factors have combined to significantly improve the affordability of ACT dwellings,” it said. “It remains to be seen how further fiscal retrenchment will affect affordability in the ACT housing market.”
HIA senior economist Shane Garrett said Canberra’s housing affordability would continue to improve as interest rates stayed at record lows and house price growth remained flat.
“I think price pressure in Canberra will be restrained,” he said.
Mr Garrett said a slight increase in earnings during the March quarter had also contributed to the large increase in affordability.
The index, issued on Wednesday, also showed that new house affordability in the ACT slumped to -8.9, which was the worst reading since June 2010.
Nationally, housing affordability reached its most favourable level since 2002 after increasing by 2.1 per cent in the March quarter.
