 Improvements in housing affordability
Marginal gains in housing affordability are being attributed to lower house prices and cuts in interest rates. The September quarter saw the Housing Industry Association/Commonwealth Bank affordability index rise by three per cent. The survey shows that housing affordability is rising for a second straight quarter after reaching a record low during the March quarter. 
However, the average national index was 1.1 per cent lower than a year earlier at 109.1 points.
HIA chief executive Chris Lamont said expected cuts to interest rates in the next few months would make housing more affordable. "First home buyer affordability has been languishing at or near record lows for a long time now, but aggressive interest rate cuts and the additions to the first home owners grant, particularly for new housing, provide some welcome relief," Mr Lamont said.According to the index survey, which has been running 14 years, housing affordability rose in Sydney, Melbourne, Adelaide, Hobart, and regional areas of Queensland, South Australia and Tasmania.
First home buyers were using 27.5 per cent of their monthly income to pay their mortgage, which was down from the June quarter.
Last week the Reserve Banks of Australia (RBA) cut official cash rates by 100 basis points, which the banks eventually passed on in full to borrowers, by lowering home loan interest rates twice.
The Federal Government has announced the first home buyer grant is being doubled for all new contracts signed between now and 30 June 2009. The increases in the grant are expected to revive a slowing housing market and already some agents are reporting an increase in enquiries from first home buyers.
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