The affordability of housing for first-time buyers remained stable over the summer months, as the June interest rate rise was offset by a slight fall in house prices.

The latest EBS/DKM affordability index showed that at the end of June first-time buyer couples nationally were spending an average of 24.5 per cent of their net income on mortgage repayments. This increased to 30.2 per cent for couples buying their first home in Dublin.

Annette Hughes of DKM Economic Consultants said yesterday that affordability had remained static since the beginning of the year.

First-time buyers are in a better position now than at the end of 2006, when 26.5 per cent of their net income was being absorbed by mortgage repayments.

Ms Hughes expects that affordability will remain at current levels in September, even if a further interest rate rise materialises.

Dara Deering, head of retail business at EBS, predicted yesterday that more first-time buyers would enter the market in the coming month.

Estate agents are already reporting signs of increased activity, she said.

"There are still significant numbers of people of house-buying age," she said. "Many of these people have yet to buy their first house.

"By the end of the year, we expect to see house prices fall marginally compared to prices at the end of 2006 and then remain unchanged as we move into 2008."

Gareth Murphy, editor of Irish Property Buyer magazine, noted that the Minister for Finance, Brian Cowen, had committed to increasing the thresholds for mortgage interest relief to €10,000 for single first-time buyers, and to €18,000 for couples.