Housing affordability continues to worsen in the ACT, with its affordability index dropping by 1.5% during the September quarter.

According to the latest national report released by the Housing Industry Association, the current affordability index is 6.3% less favourable than last year’s figures.

“The result for the ACT shows that affordability is a bigger problem than any time since the final quarter of 2012. Amongst Australia’s eight capital cities, Canberra is the third most challenging in terms of affordability after Sydney and Melbourne,” said Greg Weller, HIA executive director for ACT and Southern NSW.

Affordability is so bad that a household with average earnings would have to allot around 37% of their budget to mortgage – 7% higher than the recognised manageable level.

“House price growth has been the biggest contributor to the fall in the index, which in itself is not altogether bad considering that house prices have only risen modestly over recent years,” said Weller.

He called on the incoming ACT government for a reform, starting with bringing more land to the Canberra market and reducing the red tape that impede the delivery of new housing.