Housing affordability has worsened in June quarter: HIA

Jul 19 2016 at 1:02 PM Housing affordability has worsened in June quarter: HIA Housing affordability has worsened Housing affordability has worsened Wolter Peeters DEFINITION of 'Affordability Index' A measure of a population's ability to afford to purchase a particular item, such as a house, indexed to the population's income. An affordability index uses the value of 100 to represent the position of someone earning a population's median income, with values above 100 indicating that an item is less likely to be affordable and values below 100 indicating that an item is more affordable. BREAKING DOWN 'Affordability Index' An affordability index is most often associated with housing costs. Housing affordability indexes often compare the cost of purchasing a home in different lacations. Points above 100 indicate that a typical family will be less likely to qualify for a mortgage on a home in the area, while a value of 100 indicates that the typical family can just barely afford to live there. Read more: Affordability Index Definition | Investopedia http://www.investopedia.com/terms/a/affordability-index.asp#ixzz4Epa4fFqD Follow us: Investopedia on Facebook Read more: Affordability Index Definition | Investopedia http://www.investopedia.com/terms/a/affordability-index.asp#ixzz4EpZspohe Follow us: Investopedia on Facebook ========================= by Su-Lin Tan Housing affordability has slid backwards, worsening over the June quarter, the Housing Industry Association's Housing Affordability Index shows. Affordability worsened the most in Melbourne after its affordability index fell 7.4 per cent. Canberra dropped 5.7 per cent, and Sydney slid 1.6 per cent. Perth's affordability was the best amongst the capital cities, as housing prices in Perth continue to fall from the mining industry decline. "Home price growth moderated in the early part of the year and the HIA Housing Affordability Index showed an improvement in affordability during the March 2016 quarter. However, in the June quarter dwelling price growth returned and the index reverted to the level we saw at the end of 2015," HIA Economist, Geordan Murray said. "The geographic variation in affordability is most evident in the comparison between Melbourne and Perth. Over the last year, the median dwelling price in Perth has fallen by 4.7 per cent while Melbourne's has grown by 11.5 per cent. This has seen the affordability index for Perth increase by 6.2 per cent over the last year, while the index for Melbourne has fallen by 6.2 per cent." Nationally, affordability fell by 3.7 per cent during the June quarter and was 2.1 per cent less favourable than the same period a year earlier. The capital city housing affordability index fell by 4.3 per cent during the quarter, while regional affordability improved. The cooling of the housing market in Sydney and Melbourne, which started late last year, has not sustained. A further cut to the cash rate this year has buoyed housing demand, while uncertainty triggered by a delayed election and world events like Brexit has increased vendors reluctance to sell and reduced the volume of established housing stock for sale. Read more: http://www.afr.com/real-estate/residential/housing-affordability-has-worsened-in-june-quarter-hia-20160719-gq8rdh?&utm_source=social&utm_medium=twitter&utm_campaign=nc&eid=socialn:twi-14omn0055-optim-nnn:nonpaid-27062014-social_traffic-all-organicpost-nnn-afr-o&campaign_code=nocode&promote_channel=social_twitter#ixzz4EpXd06A9 Follow us: @FinancialReview on Twitter | financialreview on Facebook