Is now a good time to buy
a home? Some say so. The RBA say that a typical home worth a little over four
times the average household's annual after-tax income This is down from almost
six times, just five years ago.
Strong growth in incomes over the last three months, [despite
rising unemployment levels] and a period of more sluggish median house price
growth are working in the interests of first time home buyers.
But housing still remains expensive by historic standards. In the
1980s, it took just three times the average annual disposable income to afford
a median priced home.
Australia Canada United States US
The governor of the Reserve Bank, Glenn Stevens, said yesterday
that the gradual improvement in affordability suggested Australian house prices
were not heading for the same large price falls witnessed in other countries.
"In Australia
"This is evidence for at least the possibility that these
adjustments can take place over reasonably lengthy periods and without being
terribly disruptive to the economy."
Also working in favour of prospective home buyers has been the
drop in mortgage interest rates to their lowest since the 1960s. Mr Stevens
said this had already delivered a significant boost to household spending
power. "I don't have much doubt that certainly for the household sector,
this is an expansionary setting of policy."
Mr Stevens has also held open the possibility
of further small interest rate cuts if needed to boost consumer confidence.
