The dream of home ownership for Australians has become tougher as the price of established houses became dearer in the June quarter, a report says.
The Housing Industry Association and Commonwealth Bank First Home Buyer Affordability index declined by 5.1 per cent to 152.5 points in the June quarter from 161.0 index points in the March quarter.
However, the index was 41 per cent higher than in the corresponding period a year ago indicating that home affordability is better now than in June 2008.
HIA chief economist Harley Dale said on Thursday that home prices rose as demand increased, ahead of an expected lift in the supply of new houses in the second half of 2009.
“The lift in established house prices stands in marked contrast to the predictions of a house price rout,” Dr Dale said in a statement.
“But we have neither boom nor bust conditions.”
Dr Dale said low interest rates, a recovery in home building and a wind back in the boost to the first home owners grant would keep some pressure off house prices.
“A step-down in the first home owner grant boost and a lengthening pipeline of new housing supply will help to keep established house prices in check, while low interest rates will keep affordability close to seven-year highs through the second half of 2009,” he said.
After a series of cuts since September last year, the Reserve Bank of Australia (RBA) kept the cash rate at a 49-year low of 3.0 per cent for the fourth consecutive month in August.
In October 2008, the federal government doubled the first home owners grant to $14,000 for established dwellings and tripled it to $21,000 for newly built homes.
The increase was expected to be wound back by June 30 but was extended to September 30 and will be phased out at the end of 2009.
Total building approvals have risen 17.69 per cent between January and June this year, Australian Bureau of Statistics (ABS) data showed.
Repayments on a typical first-home mortgage increased by 7.6 per cent to $1,983 a month in June quarter, from $1,843 the previous quarter.
Monthly repayments was 19.7 per cent of total first home buyer income in the quarter, but still lower than the peak of 28.3 per cent in the March quarter of 2008.
Households would require a yearly income of $79,300 to buy a median first home price of $419,900 with a mortgage of $336,000, the report said.