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Act fast – property affordability is improving

By Louise Morrin

It wasn't so long ago that policymakers were warning that Sydney's property market could be becoming too unaffordable. However, fast-forward a few months and you'll soon realise this isn't the case, especially as new figures suggest affordability has now returned to 2013 levels.

The Adelaide Bank/ REIA Housing Affordability Report for the first quarter of the year identified that property prices have improved in seven out of the eight states and territories. New South Wales experienced the greatest improvement of all, so there's been no better time to buy Carlton property in recent years.

Why is property becoming more affordable?

The Real Estate Institute of Australia (REIA) suggested there might be various reasons why real estate in St George and other parts of the country is becoming more favourably priced.

A slowdown in property price growth, smaller loan sizes and better interest rates have all played their part. There's even a possibility that loan rates could become even more enticing – these results cover the period before the official cash rate was cut to 1.75 per cent.

President of the REIA Neville Sanders explained that people are finding they have more money in their pockets when it comes to paying off their mortgages.

"The latest comprehensive data shows an improvement in housing affordability nationally with the proportion of income required to meet loan repayments going down to 30 per cent from 32.4 per cent in the last quarter of 2015 and 30.8 per cent a year ago," Mr Sanders commented.

It may still be a while yet before prices are quite in line with what first-time buyers are hoping for, but it's a sign of progress nevertheless. The December quarter Residential Property Price Index from the Australian Bureau of Statistics showed that values in the Harbour City were down 1.6 per cent from the previous three-month period, which should give buyers further room for optimism.

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