Houses became more affordable over June quarter

What this translates to is Australians are spending 40.1 per cent on mortgage repayments on an average wage. While this is above the recommended 30 per cent, it is a sign of improvement.

“Easing house price pressures are providing some affordability relief for home buyers,” said Diwa Hopkins, HIA economist.

“Previous strong price increases were met by an unprecedented level of building which is now starting to come online.

“This is providing much-needed additional supply in key markets, helping to reduce price pressures and ultimately improve affordability for home buyers.”

The report also analysed dwelling prices in relation to rental prices as a measure of balancing supply and demand, and found most markets to be evenly balanced.

“In Sydney and Melbourne in particular, while dwelling prices are coming off the boil, rental price increases have been steady. This suggests the overall supply of housing is well-matched with demand, Ms Hopkins said.

“With an even balance in overall housing supply and demand in these key markets, the current downturn in dwelling prices is unlikely to be prolonged or severe.

“We could expect this downturn in prices to play out like previous cycles. They typically last 12 to 18 months, with the size of the fall modest relative to the immediately preceding expansion.”

Currently, Ms Hopkins said declining prices will keep driving improvements in affordability, especially in Sydney and Melbourne.