Interpac Business and Migration Solutions Melbourne Australia

(August 18, 2010)

Housing affordability sank to a year-and-a-half low in the June quarter as interest rate rises and price increases put them out of reach of first time buyers.

The Housing Industry Association-Commonwealth Bank housing affordability index dropped 9.1 per cent to 108.3 in the June quarter from 118.8 in the March quarter, the lowest since September 2008.

"There has been a dire lack of commitment in this federal election campaign to address the substantial hurdles aspiring home owners face," said HIA chief economist Harley Dale.

"Helping Australians afford a roof over their head is surely a fundamental responsibility of government," he said.

The index factors in interest rates, which moved up twice in the June quarter to 4.5 per cent, along with household incomes and house prices.

"Unless as a nation we are willing to accept that home ownership is no longer a fundamental tenet of our society worth fighting for, then substantial federal engagement in addressing plummeting housing affordability is required," said Mr Dale.

Sydney's affordability dropped 9.1 per cent, while Victoria's shrunk by 6.7 per cent, HIA said. In Queensland it dropped by 7.4 per cent. In South Australia affordability went backward by 8.7 per cent.

Average monthly mortgage repayments in Sydney are $3430, and $3291 in Melbourne.

The latest grim assessment of the housing situation comes amid an estimated 200,000 house shortage facing the nation, expected to increase as builders and planning authorities struggle to keep up with demand.

Australia's economy and population continue to grow without pause, after nearly two decades since the last recession.

In Western Australia, the affordability index edged down 2.1 per cent but it rose by 2.4 per cent in Hobart as home prices moderated 5 per cent. Canberra also fared better - as home prices fell 8.9 per cent - with affordability rising 6.6 per cent.

"As a residential analyst on Australia's housing market, for me, it's very surprising to see how housing policy initiatives have played what seems to be an insignificant role in the current election campaign," said rpdata.com research director Tim Lawless.

"Despite housing costs and supply being one of Australia's most topical and pressing issues, it seems as if both major parties have mutually agreed to place the issue in the too hard basket," he said.

(Source:theage.com.au)