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WOULD-BE first homebuyers who opted to wait out the buying frenzy spurred by the federal government's grant boost last year may now be kicking themselves.

Data released on Monday showed housing affordability tanked in the final three months of 2009, retreating to levels not seen since 2008.

Housing Industry Association (HIA) senior economist Ben Phillips said first homebuyers had a small window of favourable affordability conditions to enter the market last year.

"The window is now closing," Mr Phillips said in releasing the latest affordability report on Monday.

The quarterly HIA/Commonwealth Bank of Australia survey showed affordability plunged 18.4 per cent in the December quarter and was 22.3 per cent lower than 12 months earlier.

The deterioration was widespread in all capital cities and regional areas, with the largest falls recorded in Sydney, Brisbane and Canberra.

It came against a backdrop of soaring house prices, rising interest rates and a partial unwinding of the increased first homeowners grant, which was returned to its original amount of $7000 at the start of the year.

Opposition parliamentary secretary for housing Gary Humphries said Prime Minister Kevin Rudd and his government needed to explain why 2010 had become the year of housing unaffordability.

"When Kevin Rudd described the issue of housing affordability in 2007 as the `ultimate barbecue stopper' Mr Rudd was clearly angling for political capital," the senator said in a statement.

"When he got into government, we have witnessed the number of homeless rise, private rental costs rise, interest rates go up and now housing affordability plummet."

HIA is forecasting a moderate housing recovery in 2010, with about 152,000 dwelling starts, but still below the 190,000 required to keep pace with Australia's population growth.

"Without the required new home building to keep up with underlying requirements, house prices and rents are expected to continue pushing upwards through 2010," Mr Phillips said.

Labor backbencher Kelvin Thomson said the plunge in housing affordability was a direct consequence of ballooning population growth.

"Runaway population growth is damaging our young people's chances of buying a home, and our children's chances of buying their own home are fading away," Mr Thomson said in a statement.

Other data released on Monday also highlighted the impact of the government unwinding its stimulus.

Motor vehicle sales fell by 3.4 per cent in January, led by a 17.4 per cent tumble in business vehicles after the government's 50 per cent business investment tax break also ended on December 31.

"It's conceivable that there could be more declines in business vehicle sales for a couple more months," National Australia Bank senior economist David de Garis said, adding that the data reflected deliveries rather than new sales.

Treasurer Wayne Swan reminded parliament of the importance of the government's stimulus measures for an economy that created some 180,000 jobs "at a time of great trauma in the global economy".

"Bread winners were going to work, businesses were keeping their doors open because of economic stimulus and because of the remarkable resilience of the Australian economy," he said.