FOR IMMEDIATE RELEASE

30 May 2013

Housing Affordability Improves in March but Challenges Remain in Key Areas
The trend of improving housing affordability has continued into 2013 with affordability rising by 1.2 per cent in the first three months of the year. An easing of mortgage lending rates alongside subdued house price developments were the main divers of this improved affordability, said the Housing Industry Association, the voice of Australia’s residential building industry. The HIA-CBA Housing Affordability Index inched up by 1.2 per cent in the March 2013 quarter to a level of 69.7. The index is now 12.8 per cent higher than twelve months earlier. “The improvements to affordability in this update, however, were not universal,” said HIA Senior Economist, Shane Garrett. “Housing affordability across regional Australia deteriorated mildly in the March quarter this year, due largely to dwelling price increases which offset the effects of reduced lending rates,” commented Shane Garrett. “Overall, the trend across the capital cities is one of continued improvement in affordability, with the capital city index increasing by 2.0 per cent in the March 2013 quarter. However the cities of Adelaide, Perth and Hobart each saw declines in affordability,” added HIA Senior Economist Shane Garrett. “Some of these developments notwithstanding, the overall trend of improvement continued into 2013, and we can expect further improvements over coming quarters as the latest RBA rate cut flows through to households,” noted Shane Garrett. “However, much of the recent improvement in affordability is the result of the weaknesses that affect the economy. The structural issues which dramatically push up the cost of new housing, including high taxes and regulatory costs, remain outstanding and in urgent need of reform. Policy makers should be cognisant of this situation and act to reduce the unacceptably large gap between new and existing property prices,” added HIA Senior Economist Shane Garrett. Reductions in affordability occurred in Adelaide (-4.1 per cent), Hobart (-3.8 per cent) and Perth (-2.6 per cent) during the March quarter of 2013. Affordability improved in Brisbane (up by 6.2 per cent), Melbourne (up by 4.7 per cent), Canberra (up by 2.6 per cent), and Sydney (up by 1.2 per cent). Outside of the capital cities, affordability deteriorated in regional South Australia (-3.8 per cent), regional Victoria (-1.2 per cent) and regional Queensland (-0.7 per cent), but improved in regional Tasmania (up by 2.8 per cent) and regional New South Wales (up by 0.3 per cent).

For further Information contact: Shane Garrett, HIA Senior Economist on 0416 633 261 For copies of the publication (media only) please contact: Kirsten Lewis on k.lewis@hia.com.au or 02 6245 1393

HOUSING AFFORDABILITY INDEX, AUSTRALIA
Source: HIA-Commonwealth Bank Affordability Report

80.0 75.0 70.0

65.0
60.0 55.0 50.0 45.0 40.0 35.0 30.0

M08

J08

S08

D08 M09

J09

S09

D09 M10
TOTAL

J10

S10

D10 M11

J11
OTHER

S11

D11 M12

J12

S12

D12 M13

CAPITALS

HOUSING AFFORDABILITY INDEX AUSTRALIA
Median Dwelling Price Mar Qtr 11 Jun Qtr 11 Sep Qtr 11 Dec Qtr 11 Mar Qtr 12 Jun Qtr 12 Sep Qtr 12 Dec Qtr 12 Mar Qtr 13
* Annualised

Interest Rate %pa 7.12% 7.08% 7.05% 6.80% 6.67% 6.40% 6.03% 5.82% 5.67%

Monthly Mortgage Repayment $ 3,008 3,006 3,007 2,972 2,834 2,812 2,686 2,633 2,604

Average Weekly Earnings* $ 67,059 67,943 68,832 69,217 70,008 70,158 70,158 72,592 72,592

Qualifying Income $ 120,320 120,257 120,281 118,886 113,358 112,468 107,442 105,315 104,145

Affordability Multiple 1.79 1.77 1.75 1.72 1.62 1.60 1.53 1.45 1.43

Affordability Index 55.7 56.5 57.2 58.2 61.8 62.4 65.3 68.9 69.7

$ 467,800 469,100 470,600 475,800 459,100 467,000 461,900 461,900 463,400

HOUSING AFFORDABILITY INDEX BY REGION
NSW Sydney
Sep Qtr 11 Dec Qtr 11 Mar Qtr 12 Jun Qtr 12 Sep Qtr 12 Dec Qtr 12 Mar Qtr 13 50.0 50.5 50.1 51.9 54.3 57.2 57.9

VIC Rest of State
62.6 63.0 64.6 67.1 69.8 76.1 76.3

QLD Rest of State
54.2 58.4 58.4 60.7 61.8 64.5 63.7

WA Rest of State
59.7 59.9 62.5 64.6 67.1 72.6 72.1

SA Rest of State
71.1 67.9 73.8 73.8 77.9 82.6 82.7

TAS Rest of State
61.8 60.5 64.4 63.2 66.9 71.7 69.0

ACT Rest of State
76.3 76.7 77.1 82.6 87.0 88.9 91.4

Melbourne
53.7 56.2 60.3 59.4 61.6 64.1 67.1

Brisbane
56.8 61.7 65.5 64.3 68.0 72.3 76.8

Perth
58.4 60.8 59.7 62.6 64.2 68.2 66.4

Adelaide
63.6 63.3 66.1 70.0 71.1 76.2 73.1

Hobart
68.8 71.0 73.1 73.2 78.4 83.5 80.3

All
57.4 60.9 65.4 67.7 71.3 74.0 75.9

AFFORDABILITY MULTIPLE*
NSW Sydney
Sep Qtr 11 Dec Qtr 11 Mar Qtr 12 Jun Qtr 12 Sep Qtr 12 Dec Qtr 12 Mar Qtr 13 2.00 1.98 2.00 1.93 1.84 1.75 1.73

VIC Rest of State
1.60 1.59 1.55 1.49 1.43 1.31 1.31

QLD Rest of State
1.85 1.71 1.71 1.65 1.62 1.55 1.57

WA Rest of State
1.68 1.67 1.60 1.55 1.49 1.38 1.39

SA Rest of State
1.41 1.47 1.35 1.36 1.28 1.21 1.21

TAS Rest of State
1.62 1.65 1.55 1.58 1.50 1.39 1.45

ACT Rest of State
1.31 1.30 1.30 1.21 1.15 1.13 1.09

Melbourne
1.86 1.78 1.66 1.68 1.62 1.56 1.49

Brisbane
1.76 1.62 1.53 1.56 1.47 1.38 1.30

Perth
1.71 1.65 1.67 1.60 1.56 1.47 1.51

Adelaide
1.57 1.58 1.51 1.43 1.41 1.31 1.37

Hobart
1.45 1.41 1.37 1.37 1.28 1.20 1.25

All
1.74 1.64 1.53 1.48 1.40 1.35 1.32

REQUIRED LOAN REPAYMENTS BY REGION ($PER MONTH)
NSW Sydney
Sep Qtr 11 Dec Qtr 11 Mar Qtr 12 Jun Qtr 12 Sep Qtr 12 Dec Qtr 12 Mar Qtr 13 3,790 3,728 3,794 3,703 3,543 3,471 3,428

VIC Rest of State
2,361 2,332 2,296 2,238 2,152 2,037 2,030

QLD Rest of State
2,358 2,239 2,271 2,160 2,121 2,084 2,111

WA Rest of State
2,528 2,541 2,491 2,399 2,307 2,212 2,228

SA Rest of State
2,713 2,815 2,577 2,582 2,446 2,417 2,417

TAS Rest of State
2,116 2,158 2,036 2,092 1,977 1,911 1,987

ACT Rest of State
1,891 1,898 1,906 1,801 1,710 1,707 1,660

Melbourne
3,335 3,260 3,078 3,090 2,983 2,937 2,808

Brisbane
3,311 3,078 2,965 3,008 2,842 2,770 2,608

Perth
3,457 3,288 3,331 3,184 3,105 3,064 3,148

Adelaide
2,645 2,651 2,555 2,428 2,391 2,315 2,411

Hobart
2,334 2,280 2,235 2,260 2,111 2,020 2,101

All
3,467 3,288 3,095 3,074 2,922 2,876 2,804

* Number of average full time adult wages required to affordably service a mortgage on median priced dwelling.

NOTE: In 2010 the HIA Economics Group implemented a number of modifications to the HIACommonwealth Bank Housing Affordability Index to enable more accurate evaluation of housing affordability in Australia. As a result of the amended methods the Index has been rebased, therefore values in this report are not directly comparable with editions prior to the September 2010 quarter report. Further information about the index methodology can be obtained from the HIA Economics Group website at http://economics.hia.com.au/publications/hia_cba_affordability_report.aspx

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