Greater Hope For Home Buyers

Home loans have become more affordable for the average buyer as strong competition in the lending market has brought lower interest rates.

Falling interest rates, lower house prices and higher incomes have combined to to make houses more affordable for the average home-buyer in the March quarter.

Sydney house prices fell 7 per cent, to an average sale price of $191,000.

The joint Real Estate Institute of Australia (REIA) and mortgage insurer MGICA home affordability index showed a slight improvement in the March quarter.

In the past nine months, buying a home has become an increasingly affordable option.

With intense competitive pressure causing further cuts to home lending rates in recent weeks, the affordability index is expected to improve markedly next quarter.

The president of the REIA, Mr Phillip Bushby, said: "The housing market is just starting to emerge from a profound slump in which it has found itself over the last few years.

"Housing is now entering into a period of sustained, steady growth and, as home loans become more affordable, and more first home owners can afford to enter the market, this trend will be accelerated."

As a result of more affordable homes, the building industry expects conditions to improve over the next six months, following a period of job losses and low sales.

A survey of home builders by the Housing Industry Association (HIA) in the last two weeks of June showed more than a third of home builders had been forced to cut jobs and, during the first half of 1996, sales had weakened.

The national executive director of the HIA, Dr Ron Silberberg, said: "Confidence climbed immediately following the March Federal election, but the housing honeymoon was short-lived".

The industry expects to pick up slowly over the next six months and NSW is expected to be the first to emerge from the doldrums.

The REIA/MGICA affordability index for NSW rose 3 per cent in the March quarter. All other States except for Queensland also improved. Tasmania recording the greatest jump, up 3.5 per cent.