Housing affordability has improved for 10 consecutive quarters, following further gains in the June Quarter.

The Housing Affordability Index published by the Commonwealth Bank and the Housing Industry Association shows that the steady increase in affordability has coincided with a period of interest rate reductions and steady increases in incomes.

Affordability has improved in 2013 despite increases in average prices over the past three quarters, thanks to multiple interest rate cuts and rising earnings.

In the two years since June 2011, the affordability index has improved from 56.5 to 72.8, during a period in which average weekly earnings have increased from about $68,000 to $74,000 and interest rates have dropped from 7.08% to 5.35%.

Over that time frame, the median dwelling price initially rose from $469,000 in June 2011 to $476,000 at the end of 2011, before dropping in 2012 to level around $462,000 at the end of last year.

The median dwelling price, according to this report, is now back up to $465,000, but lower rates and higher incomes have more than compensated. As a consequence, the typical monthly mortgage payment have fallen steadily, quarter by quarter, from $3,006 in mid-2011 to $2,536 in June 2013.

The Affordability Report by the CBA and the HIA says that housing affordability is now 16.7% better than it was a year ago. The improvement has been felt in all capital cities and also in regional Australia.