I think the affordability of homes right now is very bad due to a combination of three factors
1) Prolonged period of low interest rates
2) First home owners grant
3) Introduction of cut price mortgage lenders such as aussie home loans "I'll save ya"
4) Low deposit loans
The way I see it, is that housing is something that everyone must have and should deserve and so people will pay for it upto their maximum purchasing power. So while the 4 factors mentioned above obviously helped those who got in early and made housing more affordable, over time those monetry savings shifted from the purchaser to the seller. Getting the $10,000 grant only made the seller 10,000 richer and so on with the other interest rate savings. So increasing the first home owners grant and lowering rates won't help, all it will do is prolong the affordability crisis locking out even more people. I don't think lenders can reduce the margins, so that to me was a once off affordabilty boost that can't be repeated. Even now aussie home loans is moving into the credit card business to cut the margin there.
As I see it the only thing which will help affordabilty is time and I don't believe we have a land shortage.
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