Housing affordability at record low

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Housing affordability is at its lowest level on record due to rising house prices and interest rates.

The Commonwealth Bank of Australia and the Housing Industry Association (HIA) said their affordability index for first homebuyers has dropped for the fourth time in a row.
Affordability fell by 5.5% during the December quarter, bringing the index to almost 98 points - the first time the index has dropped below 100 since it was started in 1984. 
An average Australian first homebuyer now requires at least 30% of their disposable income to meet minimum monthly payments on a new mortgage.

Affordability fell in all metropolitan and regional areas, except for regional Victoria. According to the HIA, Queensland has reached "desperate" levels, with figures showing that homes in the state are now less affordable than ever before.

Construction of residential dwellings also remained flat last year as a result of low affordability. According to the Australian Bureau of Statistics, building activity was down by 0.4% and 9% less work was done in comparison to the same quarter of 2005. In every state and territory, except Western Australia, new residential building work in the September 2006 quarter remained flat compared to a year earlier.

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