Australian homes are becoming more affordable, with less than a third of the family income now going towards mortgage repayments, the Real Estate Institute of Australia (REIA) said this month.

The REIA/Deposit Power Housing Affordability Report shows that the proportion of family income that is required to meet mortgage repayments has seen its largest change since 1995.

By the end of December 2008, the average Australian homeowner was paying $300 less per month for their mortgage than in the previous quarter.

This means that the percentage of family income needed decreased nationally from 38.8 per cent in the September quarter 2008 to 32.4 per cent in the December quarter 2008.

REIA President, Noel Dyett said this is the largest quarterly change recorded by the REIA since calculations of this affordability measure were first made in 1995.

"Our data shows that average Australian households were paying in excess of $300 a month less for their home loan at the end of December than they were three months earlier at the end of September", Mr Dyett said.

ABS data included in the Housing Affordability Report also indicates that the Boost to the First Home Owners Grant, coupled with lower interest rates, is having a positive effect on the housing market.

"Housing is an important sector of the Australian economy and consequently will play a key role in helping the nation try to avoid severe recession", concluded Mr Dyett.