Rise in house affordability 'offers hope for buyers'

People who are hoping to obtain a home loan deal could find there is a light at the end of the tunnel for them, following new figures from the Commonwealth Bank/Housing Industry Association (HIA).

The new affordability index has revealed that affordability rose to 55.7 per cent during the first quarter of 2011, with an easing on the cost of homes during the start of the year said to be the cause.

This figure is an increase on the 54.1 per cent that was seen during the closing three months of 2010.

"The housing market has responded to a higher home loan interest rate environment following the series of rate hikes throughout the course of 2010, which can be seen in some softening in dwelling prices," said senior economist for the HIA Andrew Harvey.

Recently, Ric Battellino, deputy governor of the Reserve Bank of Australia, said some first home buyers may have overstretched themselves when they purchased property in 2009 with the federal government grant.  ADNFCR-1761-ID-800560630-ADNFCR