Oz Property is continuing to become more affordable, according to the Housing Industry Association.

The HIA's Affordability Index increased by 5.3 per cent in the third quarter of 2012, leaving property in Australia 15 per cent more affordable for buyers than the same period in 2011. Improvements were evident across all geographical areas, says the report, as Interest Rates and prices decline.

"This is the seventh consecutive quarter where we have seen an improvement in the headline affordability index," said HIA Chief Economist, Dr Harley Dale. "The run of consecutive improvements in some regional indices is even longer, in some instances showing affordability has reached levels not seen since the early 2000s."

"Housing affordability has been improving on the back of steadily growing incomes, falling interest rates, and easing dwelling prices," said Harley Dale. "At the same time, however, Transactions Volumes have remained historically low as economic uncertainty has weighed heavily on households' willingness to engage in the residential property market."

"Tentative signs of a recovery in transactions volumes should hopefully gather legs - another interest rate cut in early December would enhance the prospects of this occurring," added Harley Dale. "An increase in home buyer action can occur without generating undue inflationary pressure and would assist a much-needed recovery in new residential construction activity."