The research comes as new figures from Rismark show the average dwelling price-to-disposable household income ratio has fallen from a peak of 4.7 times in December 2009 to 4.2 times in the 2011 March quarter.
However, new figures out today show the number of dwelling commitments approved in April rose by a seasonally adjusted 4.8% in April, higher than expected.
REIA president David Airey says the market is becoming more affordable, but there are few buyers as confidence plummets.
"I think we're going to have to see two or three more quarters of results to start predicting an upturn," Airey says.
The REIA report shows the first quarter of the year has shown a slight improvement in affordability. Overall the percentage of income required to meet repayments has declined by 1.1 percentage point to 34.2%.
The Northern Territory, Queensland, Tasmania and Western Australia showed improvements in affordability, with the lowest being repayments in Western Australia now requiring 26.4% of income. However, New South Wales, Victoria, the ACT and South Australia have recorded declines in affordability.
The amount required to meet repayments in Victoria rose by 3.3 percentage points to 39.5%
However, the report also shows the number of new finance commitments to first home buyers has collapsed by 16.1% over the quarter to just 20,274. And over the past year, new finance commitments have fallen 20.6% in the fifth consecutive annual decline.
The participation of first home buyers in the total number of finance commitments has dropped to the lowest level since 1994, at 15.4%, well below the long-term trend of 20%.
Airey says while prices are continuing to fall and wages are increasing, first home buyers will stay away from the market as long as there is pessimistic talk about the economy and how interest rate rises will affect them.
"The Australian public have lost confidence in the economy, they've lost confidence in the Federal Government and there is constant chatter about rate rises which dampen enthusiasm to go out and borrow heavily."
"This is the reason why the property market in so many different parts of the country is suffering."
However, Rismark argues there hasn't been quite as good a time to buy in awhile. The current dwelling price-to-income ratio is now at its 2003 level.
Coupled with wages growth of more than 4% per annum, "we therefore project a continued improvement in the housing market's valuation fundamentals for at least another 12 months".
Airey says this is merely an example of the market being driven by supply.
"There is plenty of supply, and limited demand, and as long as we've got a fear of an economic downturn buyers will stay away."
"We also have to remember that it's actually healthy to have a slowdown like this. It's healthy because it brings people back to reality. No market can continue up in a straight line, and it brings people back."
Today's ABS data also shows the number of commitments for the construction of new dwellings rose by 0.4%, with commitments for the purchase of new dwellings rose by a higher-than expected 9.4%.
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http://australianpropertyforum.com/topic/8476676
Auction clearance rates are falsified by not including most of the failed auctions when calculating the initial clearance rate, so they might report an initial clearance rate of 61%. Then later in the week they quietly revise this down to maybe 54% when the failed auctions are reported. Then next week they do the same and report the clearance rate has risen from 54% to 60% or whatever their initial falsified figure is, rinse and repeat. Clearance rates always going up! It's a total sham, like the rest of the real estate market!
I agree that housing affordability is a major issue. Here is a great blog on housing affordability:
http://australianpropertyforum.com/blog/main/3271816
Australians have an abysmal track record in the real estate market. Germans have a better model that operates fairly and equally, and is the envy of most Europe but the politicians there still have to foot the bill for banking bailouts. The moral is nobody wins from crazy home price inflation, and many first home buyers are locked out of the market so something has to give, and soon.
Matt Cooper
AustralianPropertyForum.com