Battle for home buyers

Buying a house is getting harder and harder, according to an AMP Banking survey.

The survey, prepared by Massey University's real estate analysis unit, says that home affordability declined for the fourth quarter in a row and blames the 7.2 per cent fall on rising mortgage rates. Even softening house prices in some areas has failed to offset the decline in buying power.

Karen Clough, AMP Banking's marketing manager, said a reversal of mortgage rates would "result in a return of market confidence and an improvement in home affordability."

Real Estate Institute president Max Oliver said that while interest rates had risen, house prices had remained steady over the past year.

"Those two factors have caused the affordability to be worse than it was last year."