Home mortgage affordability: it's still good news

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House prices may be continuing to rise, but buying a home is still a lot more affordable than it was a year ago.

Friday, April 23rd 1999, 12:00AM

by Paul McBeth

House prices may be continuing to rise, but buying a home is still a lot more affordable than it was a year ago.
The latest AMP Home Mortgage Affordability report shows that the March index for New Zealand remained close to a record low (a low index figure signals more affordable housing). Over the past three months, firmer house prices were largely offset by low interest rates and higher wages.
Massey University's Real Estate Analysis Unit prepares the report quarterly for AMP, combining regional statistics on average weekly earnings, mortgage interest rates and housing prices to come up with a measure of home affordability.
Highlights of the latest report include (see table below for regional details):

• The March affordability index for New Zealand overall was 36.2% higher than last year and home affordability has improved in every region since then.

• However, over the past quarter, just two of the eleven regions (Northland and Waikato/Bay of Plenty) improved in affordability.

• That was thanks to falls in the median house price in those areas, while increased house prices in all other regions slightly reduced their affordability over the quarter.

• Nationwide, median house prices rose 1.2% over the past three months and total dwelling sales were up 21% on the same period last year, the first sales increase since the 1997/98 sales downturn.

• Average weekly wages also increased, by 1.8% over the quarter.

There were no surprises that the Auckland region remains home to the least affordable housing. However, the situation has only worsened only slightly in the past three months (a drop of 2.1% in the index), while homebuyers are still substantially better off than a year ago (a 41% improvement in the index).
The regions, in order from most to least affordable (remember, the regions with index figures have more affordable housing):

REGION	Current index	Improvement (decline) over
		Last quarter	Last 12 months
Southland	8.28	(7.7%)	26%
Otago	9.78	(3.2%)	37.6%
Taranaki	10.27	(9.1%)	32.5%
Manawatu/Wanganui	11.38	(3.9%)	33%
Northland	13.91	6.1%	42.4%
Nelson	14.17	(3.9%)	42%
Hawkes Bay	14.53	(10.0%)	34.2%
Canterbury/Westland	15.03	(4.5%)	36.0%
Wellington	15.49	(3.3%)	36.5%
Waikato/BOP	15.64	2.2%	37.9%
Auckland	21.24	(2.1%)	41.0%

Regional data used to produce the index:

• Monthly median dwelling prices from the Real Estate Institute of New Zealand

• Average weekly earnings data from Statistics New Zealand

• Average monthly mortgage interest rates from Statistics New Zealand.

Paul is a staff writer for Good Returns based in Wellington.

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