Houses Double In Affordability

Home loans are almost twice as affordable today as they were three years ago, according to figures released yesterday by the Real Estate Institute of Australia.

Falling interest rates, low house prices and stable incomes have contributed to a steady improvement in home-loan affordability in all states.

And Victoria would see some of the strongest growth in a nationwide home-building surge over the next 12 months, researchers at BIS Shrapnel predicted yesterday.

They tipped 1992-93 to be the strongest year for the nation's housing industry since the 1988-89 boom, predicting housing starts will reach 159,000 _ a 14 per cent increase on 1991-92 and the second-highest level in 10 years.

The Real Estate Institute calculates home-loan affordability by comparing average loan repayments with median family income. In the September quarter of 1989, loan repayments were 36.5 per cent of income. In the December quarter last year, they had dropped to 21.7 per cent nationally and 20.2 per cent in Victoria.

Home loans were cheapest in the Northern Territory (13.9 per cent) and most expensive in New South Wales (25.3 per cent). The average monthly loan repayment in Victoria was $660.

Since the June quarter of 1991, the average monthly home-loan repayment nationwide has fallen from $943 to $663, while the median weekly family income has risen by almost $30 to $706.

``Now is absolutely the best time to buy right across Australia," the institute president, Mr Grahame Werrell, said.

The BIS Shrapnel forecast said the boom in housing starts will feed into the economy and boost prospects for economic growth. The predictions are based on improving consumer and business confidence.

BIS Shrapnel says figures on housing approvals suggest Victoria should see a stronger upsurge in new housing starts this year. Until now, the recovery has been concentrated in the Melbourne market, with only minimal growth in rural Victoria, it says.