It may not feel like it, considering the high property prices in some of Australia’s cities, but housing is becoming more affordable on the back of interest rate cuts, a growth in earnings and weak price developments.

The Housing Industry Association (HIA) claims that its HIA-CBA Housing Affordability Index increased 5.5% over the December quarter, representing an 18.4% advance on the same period of 2011.

HIA senior economist Shane Garrett said the figures represent the eighth consecutive quarter of increase, bringing affordability close to levels not seen since the height of the GFC in 2009.

 “For regional areas, affordability is at levels last seen during the early 2000’s... Affordability is on the increase in every part of the country. This has been driven by the weakness of price developments as well as the two cash rate reductions effected by the RBA in the final quarter.”

He said continued growth in earnings also contributed to the increase, but noted that “affordability would be even more favourable to householders had recent RBA rate cuts been passed on fully by lenders.”

The HIA-CBA Housing Affordability Report recorded improved affordability in all seven capital city indices as well as improvements in the six indices tracking the non-metro regions of each state (Northern Territory is not included in the analysis).