Housing affordability declines, a prominent policy challenge says HIA
As the positive impact from previous interest rate cuts tapered off, Housing affordability declined slightly in the December 2013 quarter according to the HIA-Commonwealth Bank Housing Affordability Index.
The index eased by 0.5 per cent in the December 2013 quarter. Nevertheless the index was still at a level 8.4 per cent higher than that was observed in the December 2012 quarter noted Harley Dale, HIA Chief Economist.
Addressing the large supply side impediments to a structural improvement in affordability for all Australians is one of the nation's most prominent policy challenges he stated.
"Addressing this challenge requires focus from all levels of government and would provide considerable benefit to the Australian economy."
This week, the Mortgage and Finance Association (MFAA) called on the Government to facilitate competition within the banking system to lower interest rates and encourage loan product innovation. The association believes that greater supply should provide a medium to long term solution but shorter term solutions need to be considered in assisting first time buyers to bridge the gap between finance and current housing prices.
The HIB-CBA Housing Affordability Index declined in four out of the six surveyed capital cities: Hobart (-9.2%), Sydney (4.4%), Perth (-2.5%) and Brisbane (-1.0%).
While housing affordability remains an issue for people trying to get into the housing market, many people with existing home loans who are experiencing mortgage stress could save money by switching lenders. On a $500,000 home loan you could save $232 a month by switching from an average home loan paying 5.29% interest to the market's lowest rate at 4.49%. Compare all home loans on Mozo here.