Housing affordability in Australia surged again in the last quarter of 2012, driven by earnings growth, interest rate cuts and weak price developments, according to the latest analysis from the Housing Industry Association.

The HIA-CBA Housing Affordability Index increased by 5.5% in Q4 2012 quarter, representing an 18.4% increase on the same period in 2011.

‘This is the eighth consecutive quarter of increases in the index, bringing it close to levels not seen since 2009,’ stated HIA senior economist Shane Garrett.

He added: ‘For regional areas, affordability is at levels last seen during the early 2000’s decade. Affordability is on the increase in every part of the country. This has been driven by the weakness of price developments as well as the two cash rate reductions effected by the RBA in the final quarter. Continued growth in earnings has also served to make housing more affordable.’

The report recorded improved affordability in all seven capital city indices as well as improvements in the six indices tracking the non-metro regions of each state, excluding the Northern Territory which is not included in the analysis.