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Housing market is abnormal: expert

Massey University property expert Graham Crews says the housing market is abnormal at the moment.

Thursday, July 10th 2003, 9:19PM

by Jenny Ruth

Neither wage increases nor declining interest rates were enough to offset the impact of rising house prices during the June quarter, according to the latest home affordability report which is prepared by Massey University for AMP.

Home affordability nationally fell 3.2% in the latest quarter. That followed a slight 0.7% improvement in the March quarter, but, compared with the June quarter last year, houses were 6% less affordable.

House prices rose 7.7% from $195,000 to a record $210,000 in the quarter while average mortgage rates fell from 7.83% to 7.58% and average weekly wage rate rose from $735.76 to $743.54.

"Given that low offshore interest rates will continue to push down fixed and floating mortgage rates, the fuel driving the strength in house prices will keep flowing for the time being," says AMP managing director Ross Kent.

"However, signs of overload are becoming evident in the form of high house price to income ratios, falling rental yields and the recent move of speculators into the housing market."

Graham Crews, senior lecturer in real estate at Massey, describes the housing market as abnormal.

"I cannot recall a situation where all the planets are in alignment and yet interest rates are dropping," he says. Usually, the Reserve Bank would be putting rates up to dampen activity, but the weak global economy means the reverse is happening.

Despite the national decline in the latest quarter, affordability improved in six of the 11 regions, notably Otago, up 4.3%, and Taranaki, up 4.2%, while Auckland affordability improved 1.1%.

The steepest declines in affordability were in Nelson/Marlborough, down 8.6%, Hawkes Bay, down 7.1%, and Wellington, down 5.3%.

Compared with a year ago, affordability was down in all regions except Northland, where it improved 4.2%, and Manawatu/Wanganui, up 0.2%. The biggest annual declines were in Nelson/Marlborough, down a massive 34.9%, Otago, down 16.2%, and Hawkes Bay, down 13.1%.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.09 6.95
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 20 June 2024 10:39am

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