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News: Kiwi affordability deteriorates

Tue, 09 Oct 07

The bad news on home affordability continues and there is little light at the end of the tunnel for first home buyers, the latest quarterly report from Massey's University's Property Foundation shows today...

In the past five years home affordability has declined by 70 per cent, with affordability down 13.2 per cent in the year to August, the report shows.

In the quarter ending in August, affordability, which takes into account prices, incomes and mortgage interest rates, declined by an average 2.5 per cent.

The latest decline was mainly due to rising interest rates. The Reserve Bank has hiked interest rates four times this year and added pressure has come from the credit crisis.

Not all doom and gloom

However, the quarter did bring affordability improvements in some regions. In Taranaki home affordability improved by 4.5 per cent, in Manawatu/Wanganui there was a lift of 3.6 per cent and in Northland there was a slight improvement of 0.9 per cent.

Declines in home affordability in the quarter were reported from Central Otago Lakes (16.2 per cent), Southland (10.3 per cent), Otago (8.1 per cent), Waikato/Bay of Plenty (6.7 per cent), Nelson/Marlborough (4.8 per cent), Wellington (3.1 per cent), Hawke's Bay (2.6 per cent), Canterbury/Westland (1.6 per cent), and Auckland (1.3 per cent).

All regions recorded declines in annual affordability with house prices over the year to August increasing by 12.9 per cent.

Southland leads as the easiest place to buy a house followed by Manawatu/Wanganui and Taranaki. Central Otago Lakes continues to be the least affordable region followed by Auckland, Nelson/ Marlborough respectively.

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