28/05/2014 - 11:08

Perth home affordability up 5 per cent: HIA

28/05/2014 - 11:08

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Perth's housing affordability continues to improve, with low interest rates and a slight decline in home prices combining to make the local market more accessible.

Perth home affordability up 5 per cent: HIA

Perth's housing affordability continues to improve, with low interest rates and a slight decline in home prices combining to make the local market more accessible.

The latest Housing Industry Association and Commonwealth Bank of Australia affordability index reveals Perth houses have become 5 per cent more affordable over the past 12 months, while houses in regional Western Australia have become 2.6 per cent more affordable.

The index measures average housing prices against interest rates, monthly mortgage repayments and average weekly earnings.

Average weekly earnings increased in WA by 1.9 per cent over the past year, which the HIA said had "diluted the burden of mortgage repayments relative to income".

"Affordability in WA has improved very significantly since the middle of 2010, despite strong home price growth over the past four years," the HIA said.

"The particularly buoyant state of the WA economy saw strong uplift earnings over the past five years.

"The decline of mortgage interest rates to all-time lows also supported improved affordability in the state."

Affordability improved in Perth by 0.1 per cent in the March quarter, driven partly by a 2.7 per cent dip in home prices during the period.

In regional WA, affordability improved by 2.8 per cent for the quarter.

Average required loan repayments fell by 8 per cent in Perth over the past 12 months from $3,331 to $3,055, in line with a national trend.

The Reserve Bank has kept the cash rate at a record low of 2.5 per cent since August last year and has signalled it is unlikely to increase it in the near-term.

Despite improvements over the past 12 months, Perth remains the second-least affordable capital city in the country behind Sydney.

The relative affordability of new houses in Perth has improved to become slightly more favourable than established houses in recent quarters, the HIA said, but the opposite has unfolded in regional WA.

Data from the Australian Bureau of Statistics has meanwhile revealed strong growth in residential building activity across the nation during the March quarter.

More than $13 billion of residential building work was completed during the quarter, representing an 8.4 per cent increase on the same period last year.

The value of total residential building work completed in WA increased to $1.79 billion in the March quarter.

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