Australia - House Price Value

For Australia, the HIA (Housing Industry Association) Housing Affordability Index measures accessibility to home ownership for an average first home buyer. A result of 100 means that 30% of earnings are absorbed by mortgage repayments. A value above (below) 100 means the mortgage burden is more (less) manageable.

It is measured by a ratio, average income per household to the income necessary to meet repayments (repayment burden), for on an average established dwelling purchased by first-time home buyers (qualifying income). Thus an increase in the ratio represents an improvement in affordability while a decline represents a deterioration in affordability.

Active:

• Measurements:
  • Unitary count (#)
  • Percent (%)
  • Interest rate - percent per annum (% p.a.)
  • Index n.o.s. (Index)
  • Australian dollars (AUD)
• Adjustment: Not seasonally adjusted (NSA)
• Native frequency: Quarterly
• Start dates: 1996Q1, 1997Q3, 1999Q2, 2015Q3
• Geo coverage:
  • Country (IAUS)
  • State/territory (IAUS_^^)
  • Canberra/national capital (metro area) (IAUS_MACT)
  • Aggregate of 8 capital cities (IAUS_CAP)
  • Greater capital areas (IAUS_MG^^)
  • Rest of state areas (IAUS_GR^^)

Predecessors:

• Pre-revision - Start 1994Q3 to 1999Q2, end uniformly 2021Q2 ("_21")
• 1994Q3 to 2017Q1
• 2005Q1 to 2010Q2
• 1984Q4 to 2009Q3

In calculating the index is estimating the value of a mortgage repayment representative of someone who purchased a home during the reference period. This requires a number of assumptions. A mortgage repayment is dependent on the size of the loan, the prevailing mortgage interest rate, and the mortgage term.

Qualifying income is a notional amount at which mortgage repayments are equivalent to exactly 30 per cent of income (the lowest income level at which the mortgage repayment would be affordable):

• Qualifying Income = Mortgage Repayments * 30%

The affordability index is calculated by dividing the actual level of earnings by the qualifying income:

• Affordability Index = Average Weekly Earnings * 100 / Qualifying Income

The affordability multiple describes the multiple of average full-time earnings required to affordably service mortgage repayments under prevailing conditions. The affordability multiple is calculated as follows:

• Affordability Multiple = 100 * Affordability Index

Seasonality: The components used in construction of the index are seasonally adjusted, but the index itself is not seasonally adjusted after construction. The index is compiled in a way that means it does not have seasonal characteristics.

The affordability index levels for all previous quarters have been revised to reflect the CoreLogic RP Data price series.

About the source

The HIA-Commonwealth Bank (HIA-CBA) Housing Affordability Index was a joint project. Between 2014 and 2017, it ceased to be co-branded.

The Housing Industry Association Limited (HIA) is a national industry association of residential builders and suppliers. It was formed in 1965, as an extension of a regional assocation (the Builders and Allied Trades Assocation, BATA) formed in 1946.

Commonwealth Bank (CBA) is Australia's leading provider of integrated financial services.

Further reading

At the source:

• HIA housing affordability index methodology (pdf)
• Sample report