Property price growth dent affordability

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Housing affordability for houses across Australia fell by 5.3% as a result of a strong June quarter performance for home prices, and sustained low interest rates, according to HIA-Commonwealth Bank Housing Affordability Index.

However, the fall in affordability may be temporary according to Harley Dale, HIA chief economist.

"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.

Affordability fell nationally in all regions except Melbourne where it increased a further 0.7% in the June quarter, up 49% on the June 2008 quarter. Melbourne had the lowest price growth of all states for June from the March quarter, growing just 2%.

In contrast strong price growth for New South Wales, Western Australia and Tasmania resulted in the worst falls in housing affordability.

However, New South Wales remains 51% more affordable than a year ago, Western Australia 39%, and Tasmania 39.3%.

Affordability in Queensland and the Australian Capital Territory only dropped a little given price growth was moderate. Queensland is 53% more affordable than a year ago but the Australian Capital Territory is just 18.7%.

South Australia saw a midrange fall, but yearly affordability is still up 43%.

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