Housing affordability has improved the most in Hobart, making it the most affordable capital city during the March quarter according to a new survey.

The HIA-Commonwealth Bank Affordability Report showed affordability for Hobart improved by 31%, thanks to lower interest rates and lower house prices. This means property owners are now spending 22% less ($372) on their monthly mortgage repayments.

In contrast, Canberra emerged as the country's most unaffordable city, followed closely by Brisbane and Sydney.

"Sydney recorded its best affordability result in 15 years," said Chris Lamont, HIA chief executive. "Sydney's first homebuyer affordability improved by 17% over the March quarter on account of lower interest rates and a 4% drop in house prices."
In Brisbane, affordability levels improved to 2003 levels across the state. Flat property prices and lower interest rates resulted in a 12.5% improvement in housing affordability in the March quarter.

Higher income growth relative to house price increase coupled with lower interest rates helped boost affordability in Melbourne. Over the same period, first homebuyer affordability rose by 13%.