A word on housing "affordability"

Ross Greenwood was on the Today show this morning, spruiking the possibility of a new housing boom based on the "increased afforability of homes".

What the??

Affordability (apparently) increases when demand is high and interest rates low i.e. the current situation.  Huh??

I thought affordability was the ability to "afford" the mortgage repayments.

Let's look at a smaller example for a minute.

Demand for enormous flat screen tvs is high.  Interest rates are low.  According to the current economic model the affordability for flat screen tvs must be huge.

But it isn't.  A quick look at our bottom line indicates that we cannot afford a huge flat screen tv.  The interest rate is irrelevant if the repayments cannot be made in the first place.  The number of flat screen tvs is irrelevant if we cannot afford to buy one.

The average house price in Sydney is $544000.  By what measure is this affordable?  Over half a million dollars for the average home, when the average income is $60000.  On that basis you need TWO average wages to "afford" ONE house.  Huh?!?!?!?

The economists have gone mad, but that wouldn't matter, except that the government is relying on them to run the asylum.