The cost of paying off a mortgage on a mid-priced Sydney home has climbed above $40,000 a year - or more than half the average wage - for the first time since the middle of 2012, as property values rise across the city.

Affordability deteriorated faster in Sydney than other mainland capitals during the December quarter, the latest Housing Industry Association-Commonwealth Bank Housing Affordability Index shows.

The association's chief economist, Harley Dale, said housing affordability had probably peaked for now and he did not expect a rapid deterioration in affordability because interest rates remained at historic lows.

The picture would change when interest rates started climbing.

"As soon as interest rates start rising again, affordability is going to decline at a considerably faster rate," he said.

The report highlighted how much bigger mortgage payments have become for those purchasing a typical home in Sydney.

The annual cost of paying off a mortgage on a median-priced Sydney home was $10,380 a year more than for a median-priced Melbourne dwelling, and $18,336 a year more than for a median-priced house in Hobart.

Falling interest rates meant housing affordability in Sydney improved for much of last year despite rising prices. But the sustained demand in Australia's most expensive housing market, which has pushed property prices up by 15 per cent in the past year, means housing affordability is now in decline.

The Reserve Bank left official interest rates unchanged at 2.5 per cent for the seventh consecutive month on Tuesday.

Reserve Bank governor Glenn Stevens said last month a "period of stability" in interest rates could be expected if the "economy evolves more or less as expected".

With stable interest rates, housing affordability "is not going to drop like a stone because the cost of borrowing is going to stay very low though 2014", Mr Dale said.

The annual cost of servicing a mortgage for a median-priced Sydney home rose by $2256 to $42,120 in the December quarter.

The number of average full-time adult wages required to affordably pay off that mortgage rose from 1.6 to 1.7. An affordable mortgage is deemed to be one that costs no more than 30 per cent of household income.

The association's data shows repayments for a median-priced Sydney house peaked at $46,836 a year in June 2008.

Official interest rates at the time were 7.5 per cent, or 5 percentage points above the present rate.

The index measures housing affordability using three components - home prices, borrowing rates and average incomes. The median price is obtained from home loans financed by Commonwealth Bank during the quarter.

Strong house price gains over the past year raised fears the property market may be overheating, but Mr Dale said price increases were to be expected in Sydney after a long period of subdued growth.

"It's ironic that everyone spent 10 years lamenting the poor performance of the NSW housing market and now that it's finally coming back everyone seems to want to talk about how it's overheated," he said.