Housing affordability has improved for the fifth quarter in a row, according to the Housing Industry Association (HIA) and Commonwealth Bank Housing Affordability Index.
The affordability Index improved by 6.4 per cent in the March 2012 quarter to be 11 per cent higher over the year.
HIA’s senior economist Andrew Harvey said the result signals a buyers' market.
“In the March quarter we observed a modest increase in earnings, a modest decline in lending rates and a softening in the median dwelling price," Mr Harvey said.
“So all factors moved in a direction which improved housing affordability.”
However, the HIA said the 50 basis point cut by the Reserve Bank might not have had the impact intended by the bank, as major lenders refused to pass on the rate to consumers.
“Cuts to the RBA cash rate totalling 50 basis points in late 2011 should have provided a much larger boost to affordability in the quarter but the impact was eroded as lenders widened the margin between mortgage rates and the cash rate," Mr Harvey added.
“After accounting for the wider margins, the average mortgage rate during the March quarter was only 13 basis points lower than in the December quarter.
Sydney and Perth both recorded deteriorating affordability in the March quarter of 2012 with their indices falling by 1.0 per cent and 1.8 per cent, respectively.
Affordability improved in the remainder of Australia’s capital cities. Outside of the capital cities, affordability improved in all states with the exception of Victoria which was unchanged.