Thanks to a decline in median prices, Aussie houses have become more affordable during the first three months of 2016. It improved by 2.7 per cent during the March quarter, which also translated to a 0.4 per cent improvement from the same period last year.

Capital city housing affordability rose to 4.1 per cent during the same quarter while affordability improved by 0.1 per cent in regional Australia. Sydney posted the largest improvement in affordability at 8.9 per cent, followed by Perth and Darwin at 4.9 and 4.4 per cent, respectively. However, it took a turn for the worse in Brisbane, Adelaide, and Canberra, where affordability fell by 1.2, 0.2, and 0.3 per cent, respectively.

These improvements in affordability resulted from the decline in the national median dwelling price over the three-month period. The slight increase in earnings also helped, although the increase in mortgage interest rates countered affordability.

"Had it not been for the shock increase in variable mortgage interest rates late last year, the improvement in affordability would have been even better," said Shane Garrett, HIA senior economist. "Earnings growth has been held back by slack in the economy, and this situation has also worked against improving affordability."

According to Garrett, facilitating the supply of cheaper housing is the best way to continue improving housing affordability. However, problems continue to hound the industry, and these may take a toll on affordability.

"Planning delays, land supply shortages, and the heavy tax burden are all making the achievement of housing affordability much more difficult," he said.

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