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Home affordability improves

Good news for property buyers comes in Massey University’s latest findings on home affordability which show there has been a slight improvement in affordability since June.

Tuesday, September 29th 2015, 12:46PM

by Miriam Bell

According to Massey’s University’s latest Home Affordability Report, annual deterioration in home affordability has slowed – and has recently improved.

Over the period from June 2015 to August 2015, home affordability nationwide improved by 2.3%.

Massey University senior property lecturer Dr Susan Flint-Hartle said this improvement has taken place in every region, apart from Nelson/Marlborough. 

“Even Auckland falls in line with this trend – affordability in our largest city has improved by 4.9% since our last report in June.”

Flint-Hartle said the change was due to a combination of falling mortgage rates, broadly static house prices, and modest wage improvements.

However, property buyers shouldn’t get too excited by the news.

The University’s national affordability index still shows a year-on-year decline of 6.7%.

In Auckland, affordability has decreased by 16.6% over the past 12 months and it remains 52% less affordable than the national average.

Additionally, the Reserve Bank recently said that Auckland’s house price-to-income ratio is now 9 – as compared to 4.5 around the rest of New Zealand. 

Flint-Hartle said that, while the report shows some improvement in affordability trends, the relative levels of affordability across the country haven’t really changed much.

“You must remember that these small improvements are coming off the back of historic levels of unaffordability.”

Since the data for the report was collected, the Reserve Bank has reduced the OCR further – to 2.75%.

Flint-Hartle said that reduces borrowing costs for home buyers and improves affordability in the short-term.

“But lower mortgage rates hold the potential to push up house prices in the longer-term, leading again to a deterioration in housing affordability.”

Massey University Home Affordability Report - Key findings:

• Quarterly improvement in national affordability: 2.3%

• Quarterly improvements in all regions except Nelson/Marlborough

• Quarterly improvement in Auckland affordability: 4.9%

• Annual deterioration in national affordability: 6.7%

• Most affordable region: Southland – 57% more affordable than the national average.

• Least affordable region: Auckland – 52% less affordable than the national average.

« Housing market losing “fizz”Values up but market changing »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

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