Australia’s home-building boom continues to improve affordability, according to HIA Senior Economist Geordan Murray. Affordability in six of the eight capital cities is now better than the 20-year average.

The HIA Affordability Index for the capital cities registered 75.4 in the December Quarter. This is 1.5% higher than in the previous quarter and 3.3% higher than a year earlier. “2018 was the fifth consecutive year where the industry started construction of over 200,000 homes and it was a record year for new dwelling completions,” Murray says.

“This strong flow of new housing supply is one of the key factors behind the moderation in price pressures in housing markets, which has ultimately improved housing affordability.”

Another key factor is the modest improvement in wages. Strong growth in employment in the last two years has boosted demand for workers. “We are seeing the early signs that this is translating into rising wages,” he says.

The combination of those factors and low interest rates creates a situation where affordability in most capital cities is more favourable than the 20-year average.