THERE is a slight improvement in housing affordability across Australia, but the change is small and, despite recent interest rate cuts, housing affordability remains a very real issue, according to the latest data from the Real Estate Institute of Australia.

The improvement can be attributed to an increase in wages and a slight softening of house prices.
As with most quarters, the ACT has fared better than other States and Territories across Australia with the proportion of income required to meet home loan repayments at 17.9 per cent.
To make a comparison, 12 months ago home buyers in Canberra were devoting 18.8 per cent of their income to home loan repayments.
This sounds like good news at face value, but it is important to note that the main contributor to the improvement we are seeing in our data is an increase in wages.
Although a saving in actual loan repayments is not evident, Canberra is closing the gap between the cost of owning a home and the cost of renting a home.
The proportion of income required to meet weekly rent payments takes 16.4 per cent of the average Canberra wage.
This means that on average, without including the additional costs and taxes that come with buying a home, it costs an extra $41.25 a week to pay off a mortgage in Canberra than it does to rent a property.
Although this is a very small difference, it is important to remember that, unlike renting, buying a house is buying an asset.
To put this in context with the rest of Australia, in Sydney, the gap is larger with the average home buyer committing $542.78 to weekly loan repayments while the average renter commits $386.23 to weekly rent payments.

For this reason, affordability is high on the REIA’s agenda and will remain so until a time when we see an improvement.
Given that we haven’t seen a great deal of change in the Canberra property market during 2011, what is the outlook for 2012?
Well, despite what you’ve heard, there is no housing bubble so don’t expect to see the housing market crash next year or the year after that.
REIA has conducted research and written a paper on this issue which bursts the housing bubble myth.
Property is a sound investment, particularly in Canberra because, despite small hurdles along the way, we have higher wages than the rest of the country and a good unemployment rate.
The market will remain steady during the first half of 2012, but we will start to see a pick-up in the 2012 spring/summer selling season.
With house prices down on what we have seen over the past few years, a reduction in interest rates and an increase in wages, the next nine months would be an opportune time for first-home buyers to consider entering the market.

Amanda Lynch is the chief executive officer of the Real Estate Institute of Australia.