Melbourne registered a 7.3% increase in housing affordability over the March quarter, with the overall national HIA-Commonwealth Bank Housing Affordability Index improving for the fifth straight quarter to its highest level since September 2009.
Housing affordability has been trending up since December 2010, according to the index.
The index improved by 6.4% (3.7 index points) in the March 2012 quarter to be 11% (6.1 index points) higher over the year and at a reading of 61.8.
This reading indicates that housing still remains relatively unaffordable for the average wage earner.
An index reading of 100 indicates that an individual earning an average income could service a mortgage on a median-priced property with mortgage costs taking up 30% of their income.
Currently, based on a median house price of $459,000 an individual would need to earn an income of $113,000 to comfortably service their loan and make monthly repayments of $2,800.
The most affordable capital city housing market is Hobart, with an index of 73, while Sydney is the least affordable with an index of 50.
The March quarter improvement in Melbourne was matched by an identical improvement in Adelaide, with Brisbane up 6.3%.
However, both Sydney and Perth recorded deteriorating affordability in the March quarter of 2012, with their indices falling by 1% and 1.8% respectively.
Among the smaller capital cities, Hobart housing affordability improved by 3% and Canberra by 7.1%.
Outside of the capital cities, affordability improved in all states with the exception of Victoria, which was unchanged. Affordability in non-metropolitan New South Wales was up by 2.4%, Queensland was up by 4.5%, South Australia was up by 6.4%, Western Australia was up by 8.7% and Tasmania was up by 0.4%.
Conditions are beginning to tilt back in favour of those trying to enter the housing market, says the HIA.
This article first appeared on Property Observer.