PERTH remains Australia’s most affordable capital city according to the March quarter 2019 HIA Affordability index.
The index measures the average mortgage repayments as a proportion of typical earnings in each market.
A reading of 100 indicates the threshold for an affordable market where mortgage repayments account for 30 per cent of earnings under current market conditions.
A higher index result signifies a more favourable affordability outcome.
Perth recorded 112.9 in the March quarter, higher than the December quarter 2018 result of 110.7 and well above the 20-year average.
Housing affordability improved nationally, with the capital city index rising to 76.2, up from 74.3 in the previous quarter.
The improvement in affordability was most significant in east coast capital cities.
Sydney’s result rose from 58.3 in the December quarter to 60.5.
The HIA said affordability in Sydney had deteriorated to an extent that in June 2017 it required at least two average Sydney incomes to be able to afford repayments on an average Sydney home.
In just over a year this had improved to only requiring 1.8 standard incomes to purchase the same home.
Similarly, in Melbourne the index has improved by almost 10 per cent in a year, rising from 67.7 to 70.2.
Perth and Darwin were the most affordable capitals and the only ones where the index sat comfortably above the ‘100’ threshold.
HIA said affordability in these cities had been improving since mid-2010.
The fallout from the mining and resources boom, amplified by the credit squeeze, continued to weigh on dwellings prices and confidence.
The economies of both WA and the NT have faced challenges over recent years, WA looks close to overcoming these challenges but the tough times in the NT are ongoing.
Perth prices have continued to fall, contributing to increasing affordability.
Perth dwelling prices fell 7.9 percent from the March quarter 2018, and were 2.3 per cent lower than the December quarter.
A typical mortgage payment was $2138 per month, the second lowest of the capitals, below Darwin at $1899 per month, but nearly half that of Sydney at $4045 per month.
Mortgage repayments represented 26.6 per cent of earnings in Perth, compared to 49.6 per cent in Sydney.