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House affordability slips further on interest rate hikes

Housing continued to become less affordable in the three months to September due to rising interest rates according to figures released today.

Sunday, October 17th 2004

The AMP Home Affordability Index recorded a drop of 1.6 per cent during the September quarter after the sharp 7.9 per cent decline during the previous quarter.

On an annual basis the index has declined by 13.5 per cent in the 12 months to September, the steepest annual decline recorded in eight years.

AMP said while latest Real Estate Institute figures showed house sales and prices had cooled somewhat, affordability had continued to decline as the cost of servicing a mortgage rose over the period and average weekly earnings stayed put.

"We are seeing rising interest rates start to bite for the first time," AMP general manager of savings and investment Roger Perry said in a statement.

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