Australia's housing affordability sank to a near-record low in the March quarter, thanks to rising interest rates and soaring property prices.
The latest HIA-Commonwealth Bank Housing Affordability Index for first homebuyers showed that affordability levels dropped by 4% compared to a year ago.
Capital cities recorded a drop of around 4.2%, while regional areas saw affordability levels fall by 5.3%.
HIA senior economist Ben Phillips said further interest rate rises expected in April and May would likely result in affordability crashes in the June quarter. He predicted that affordability may fall to the record lows experienced when interest rates were above 9% in 2007.
"With the Reserve Bank insistent on further rate rises, housing affordability will once again be a key issue in the mortgage belt regions of Australia," said Phillips. "Higher interest rates, exorbitant infrastructure charges, an overly restrictive and time-consuming planning system continue to fuel Australia's affordability crisis. Overcoming these issues will go a long way towards restoring housing affordability in Australia."
Affordability deteriorated in most capital cities and regional areas in the March quarter. The largest falls were recorded across Victoria (-10% for Melbourne and -15.9% for regional Victoria), Western Australia (-6.6% in Perth and -14.2% in regional WA) and regional NSW (-12%).