Housing affordability has declined in capital cities but improved in regional Australia.
The Housing Industry Association's affordability index fell by 2.9 per cent to 79.7 in the June quarter, signalling a deterioration in affordability.
The positive impact of a second interest rate cut for the year in May was overwhelmed by rising median prices for dwellings and persistently sluggish earnings growth, HIA chief economist Harley Dale said.
"The national affordability result masks wide variations around the country, an unsurprising finding given the lack of geographical consistency to the current residential cycle," Dr Dale said.
Sydney and Melbourne drove a 3.6 per cent decline in affordability in capital city markets, while there was a 2.7 per cent improvement in regional Australia.
"The large differences in the results for the capital city affordability index and its regional counterpart, together with the variation in outcomes between capital cities, exposes the folly of sweeping generalisations which refer to an Australian housing boom," Dr Dale said.
"That is simply not what is occurring - in many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions."
Many lenders, including most of the major banks, have hiked interest rates for investors while also making it harder for them to get loans, as the regulator tries to take some of the heat out of the investment property market.
Dr Dale said the risk is this will obstruct new housing supply, aggravating affordability conditions in markets around Australia.