Many first home buyers are finding it harder to purchase a home due to prices rising and the recovery.
The latest figures released by HIA-Commonwealth Bank on first home buyers affordability has shown that affordability slipped by 9.3 per cent in Melbourne in the September quarter - before the Reserve Bank raised interest rates.
The monthly loan repayment on a typical first home mortgage increased from $1930 in June to $2168 in September, a rise of 12 per cent. These figures are based on a median home price of $477,700 and an interest rate of 5.1 per cent.
Despite the deterioration, Melbourne's affordability levels are still almost 33 per cent better than at the same time last year.
Housing has remained more affordable in 2009 than it was through most of the rest of the decade. In saying that however, the outlook for affordability is not looking good, with interest rates on the way up, and the first home buyers boost being wound back and progress in reducing the structural barriers to increasing new housing supply is slow.
Ben Phillips Housing Industry Association's senior economist stated that the construction industry was being hampered by extra regulation, a slow and increasingly restricted building approvals process, a lack of land supply, taxes on new homes and skilled shortages.
Mr. Phillips stated that all these factors could be rectified but at present time it looks like they are going to be responsible for unnecessary deterioration in affordability over the next few years for first home buyers and renters.