SYDNEY: Australia’s housing affordability dropped 3.3% in 3Q as interest rates at half-decade low and government grants to first-time buyers fuelled demand and prices for property, according to the Housing Industry Association (HIA).

The housing outlook will deteriorate as interest rates rise, first-homeowner grants are wound back and the country fails to increase the level of housing supply, HIA senior economist Ben Phillips said in a report released here on Oct 22.

The monthly loan repayment needed on a typical first-home mortgage increased from A$1,983 (RM6,264) to A$2,087, according to the report, compiled by the HIA and Commonwealth Bank of Australia.

Reserve Bank of Australia Governor Glenn Stevens raised the benchmark interest rate from a 49-year low by a quarter point to 3.25% on Oct 6 and signalled he plans more increases. – Bloomberg LP