Home Affordability Improves

Homes are as affordable as they were six years ago, according to the latest Home Affordability Report from Massey University.

The national affordability index improved 11.1 per cent over the past year, which is good news for first-home buyers. It improved by 2.7 per cent during the quarter ending May 2010 and is now about the same level as it was in 2004.

The average weekly wage rate increased by $3.70 over the quarter but this was offset by a 0.16 per cent decrease in the average monthly mortgage interest rate.

Professor Bob Hargreaves, who compiles the Home Affordability Report, said the housing market remains subdued with the national median house price static.

“This is due to tighter lending criteria used by most lenders, warnings about pending mortgage interest rate increases, changes to the taxation treatment of rental houses resulting in reduced total returns for investors and the slow recovery in the world economy,” Professor Hargreaves said.

Over the past quarter, eight out of twelve regions showed improvements in affordability: Waikato 7.6 per cent, Manawatu/Wanganui 7.2 per cent, Taranaki 6.2 per cent, Hawke’s Bay 4.5 per cent, Wellington 4.5 per cent, Auckland 2.5 per cent, Nelson/Marlborough 2.1 per cent and Canterbury/Westland 2.1 per cent.

Regions showing quarterly reductions in affordability were Northland 2.4 per cent, Central Otago Lakes 2.2 per cent, Otago 0.9 per cent and Southland 0.7 per cent.