Few issues hit home as literally as housing affordability.

The question is has it worsened as a result of the current economic downturn? Are more people experiencing housing stress?

Interest rates have come down markedly, to the point that someone on an average mortgage could be up to $500 a month better off. But has that made housing more affordable?

Housing affordability is a relationship between what you pay for housing, be it a rental property or a mortgage, and associated costs such as insurance and water rates, and your gross wage.

If you are paying more than 30 percent of your gross wage for housing, you are deemed to be in housing stress.

There is a debate about whether this is an accurate enough indicator, particularly given the increasing propensity of Australians to borrow huge amounts on credit cards.

Personal debt is now a big contributor to household stress and interest rate cuts are not being passed on in this area.

What role should banks be playing at such a time? My concern with banks is that their cycle is about 12 months out. If banks have a social responsibility, which I believe they do, they should be lending now and they should have been reigning in lending a year ago. The reverse is true.

So people are feeling a lot of pain, particularly at the lower end of the market, where the biggest correction in housing prices has occurred.

While it was understandable during the massive resources boom we experienced in Western Australia, with lots of cash being thrown around, that people would be in the market for flash houses in desirable locations, it never made much sense to see prices skyrocketing in the so called “mortgage belt”.

Now the bubble has well and truly burst. But while there are more houses for sale, in all but the most desperate of cases, the prices being asked are not significantly cheaper. People are still not quite desperate enough to sell at a realistic level. There is more pain to come.

In some ways, what this economic downturn is doing is merely bringing the market back to where it should be. It was unsustainable.