Affordability in Sydney in the September quarter improved 0.8 per cent to its best position since March 2014. In Melbourne,homes are at their most affordable since the end of 2013.
HIA chief economist Tim Reardon said a modest lift in wages was helping home buyers but the main factor was the RBA's back-to-back rate cuts in June and July.
"The cuts to interest rates have more than offset the rise in home prices to ensure an ongoing improvement in housing affordability,"he said.
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"With little opportunity for interest rates to be reduced further,improvements in affordability will require the right economic conditions with a strong volume of new homes,low interest rates and supportive policy settings from state and federal governments."
Affordability may deteriorate quickly,with signs house prices in the nation's two biggest property markets have turned around sharply since the RBA began cutting rates in June.
On Friday,CoreLogic will release its monthly house price index. Its daily index shows that in the month to October 30,dwelling values had lifted 1.7 per cent across Sydney and 2.3 per cent in Melbourne.