The Reserve Bank's decision to leave official interest rates on hold given the worsening state of housing affordability and the newest figures from the House Price Index by the Australian Bureau of Statistics (ABS)offers respite for Australian home owners.

ABS figures show the eight capital cities weighted average increased by only 0.7 percent during the December 2010 quarter.

This follows a fall in the September quarter of -0.3 percent in the September quarter on revised ABS figures.“These figures point to a major slow down in house price movements – clear evidence that no rate increases are needed," said Real Estate Institute of Australia (REIA) President David Airey.

With house prices stabilizing and the last increase in official interest rates in November 2010, the pressure on declining affordability is predicted to moderate.

“In the most recent REIA/Deposit Power Housing Affordability Report, it was reported that housing affordability had reached a new low in Australia – the largest annual decrease in housing affordability since the beginning of the decade," he added.

The proportion of income required to meet loan repayments increased 5.8 percentage points to 34.8 percent in the twelve months to September 2010.

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