by Paul McBeth
Nation-wide home affordability has dropped by 25.8 per cent over the year to June, the steepest national decline in almost five years.
That's just one of the findings of the latest AMP Banking Home Affordability Survey. Softening house prices in most regions also failed to offset higher mortgage rates, meaning that affordability has now declined for the fourth quarter in a row.
AMP Banking's Marketing Manager, Karen Clough, said the decline in home affordability had largely been driven by gradual increases in mortgage rates.
"Reversal of this trend will result in a return of market confidence and an improvement in home affordability."
While homes in eight of the 11 regions surveyed became less affordable in the June quarter, three showed an overall improvement thanks to lower median house prices. These were Taranaki (10.5 per cent more affordable), Manawatu/Wanganui (4.8 per cent) and Southland (3.4 per cent).
The affordability survey is prepared quarterly for AMP Banking by Massey University's Real Estate Analysis Unit. It has been conducted since 1988 and combines data on housing prices, mortgage interest rates and average weekly earnings to produce a home mortgage affordability index.
Home mortgage affordability
(the lower the index figure, the greater the affordability)
|
Region |
Index figure: Feb 2000 |
Index figure: May 2000 |
Percentage decline over last 12 mths |
|
Northland |
15.95 |
17.52 |
5.70% |
|
Auckland |
26.16 |
27.39 |
26.42% |
|
Waikato/BOP |
18.87 |
20.24 |
20.30% |
|
Hawkes Bay |
15.60 |
15.97 |
15.04% |
|
Manawatu/Wanganui |
14.15 |
13.46 |
18.87% |
|
Taranaki |
12.88 |
11.53 |
19.75% |
|
Wellington |
18.88 |
20.13 |
33.29% |
|
Nelson |
16.48 |
17.41 |
23.70% |
|
Canterbury/Westland |
17.10 |
18.84 |
31.33% |
|
Otago |
11.62 |
13.16 |
46.75% |
|
Southland |
9.50 |
9.18 |
23.34% |
|
New Zealand |
19.39 |
20.79 |
25.79% |
Data from the AMP Banking Home Affordability report, prepared by Massey University's Real Estate Analysis Unit. For more information, click here