People entering the housing market through the first-home buyers grant boost will be most most vulnerable to any falls in home prices over the next 12 months, the Housing Industry of Australia said today.

Easing home prices, along with falling interest rates and the grant boost helped take homes to their most affordable level in seven years, according to the Housing Industry Association-Commonwealth Bank First Home Buyer Affordability Report.

The affordability index rose by 14.6% in the March quarter, falling to 153.5 from 175.8 in the December quarter, driven in part by a decline in overall prices.

However, the benefit in affordability may turn to financial ruin for first-time home buyers who find themselves locked into mortgages they can't afford.

The Age