Regional Housing Stands Out In Affordability Gloom

HOUSING affordability in Melbourne has fallen for the fifth consecutive quarter to record lows, a survey by the Housing Industry Association shows.

The Housing Industry Association's First Home Buyer Affordability Index fell 0.4% to 103.0 in Melbourne in the June quarter. But the index showed a better result in regional Victoria, where affordability improved 6.2% due to cooler house prices.

The index also showed a small improvement in affordability nationally - 0.3% - but it still represented the second-worst result in its 24-year history.

Many financial institutions, including the big four banks, lifted interest rates independently of the Reserve Bank during the quarter. The average home loan repayment in Melbourne for the period increased by 1.8% to $2891 a month, while nationally, mortgage payments accounted for 28.5% of total first home buyer income, the second highest proportion on record.

HIA's Victoria executive director, Robert Harding, said that even a modest reduction in mortgage rates this year would do little to improve affordability in the short term.

The results came as Opposition Leader Brendan Nelson called on Treasurer Wayne Swan to "stand over" the banks to ensure they pass on the official interest rate cut that is expected in a fortnight.

"If there is a cut, the banks must pass every single cent of that on to those who have got home loans and the small business community," Dr Nelson said yesterday.