Housing affordability is improving in the ACT due to growing wages and falling interest rates, a report says.
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The latest Housing Industry Association-Commonwealth Bank affordability report, published yesterday, also found that home ownership was becoming more attainable nationally, too. Its index posted its third straight quarterly improvement, of 1.2 per cent, to be 5.2 per cent better than a year ago.
''A combination of healthy earnings growth and a slight decrease in mortgage lending rates drove the September quarter improvement. Average weekly ordinary time earnings of an adult working full time increased by 1.2 per cent during the quarter while the average mortgage lending rate over the quarter was down by 0.03 percentage points,'' the report said.
''Today's figures suggest that affordability is now trending in the right direction and this is unequivocally good news for prospective home buyers.'' The November interest rate cut and the December cut ''should result in some further serious improvements''.
The Reserve Bank cut the cash rate by 25 basis points on Tuesday.
The ANZ was the first of the ''big four'' banks to pass the savings to mortgage holders.
The other three followed later. Many economists expect further interest rate cuts next year, which would improve affordability even more.
The affordability report said the Commonwealth's crackdown on public spending was ''providing a heavy anchor to income growth due to the ACT's large public sector workforce'', but growing private wages helped provide strong income growth of 4.8 per cent in Canberra over the past year.
''The median dwelling price in the ACT was relatively unchanged in the September 2011 quarter, posting an increase of 0.1 per cent to $542,600. In combination with the growth in [average earnings], a slight easing of mortgage interest rates provided a slight easing of mortgage interest rates provided a 1.8 per cent (1 point) improvement in the affordability index in the quarter, although the index remains 0.8 per cent (0.5 points) below the level of a year earlier,'' the report said.
The ACT had a housing affordability index of 57.3. This compares with 57.2 for Australia as a whole.