Dream of own home becoming nightmare

AMP's quarterly home affordability index released today showed its steepest annual decline since the height of the last property boom in 1996.

The heated property market is leaving many would-be homeowners long-term renters, prompting the Real Estate Institute to urge the Government to step in and help.

AMP general manager Roger Perry said young buyers were being forced out of the market by inadequate wages which had failed to keep pace with rising house prices and mortgage costs.

Interest rates rose six times last year but are picked to be relatively stable this year. The official cash rate was left unchanged yesterday.

That, coupled with a 46 per cent house price increase between 2001 and 2004, has meant owning a home is now beyond the reach of many.

The AMP index tracks house prices, wages and mortgage costs to come up with a measure showing how affordable houses are.

It showed a 15.1 per cent decline in the last 12 months and has been dropping each quarter for more than two years. In other words, houses are becoming less affordable.

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