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Improvements in affordability nationwide

Lack of affordability has long been a problem for New Zealand’s housing market, but a new report suggests the tide could be turning.

Friday, August 9th 2019, 10:14AM

by The Landlord

The latest Massey University Home Affordability Report shows an improvement in affordability at a national level, as well as in 13 out of 16 regions, in the second quarter of 2019.

While national affordability improved by a modest 1.2% over the most recent quarter, the annual results show a solid increase in affordability of 5.4%.

Massey University’s David White says the improvements were driven by declining house prices in many regions, combined with a reduction in mortgage interest rates and a modest 1.3% increase in wages.

“The key yearly drivers are a 5.35% decrease in residential mortgage rates, which are down to 4.78% from 5.05% a year ago.

“Incomes have also increased by 3.2%, or $18,000, nationally over the past year so these two things have offset the 3.2% increase in median house prices.”

White says that while it is difficult to forecast affordability, it is possible a medium trend could be forming.

“We have had two quarters that have been positive for affordability and we are going into the winter quarter, which is seasonally muted for house prices.

“We also have a positive economic environment for continued low interest rates and income growth.”

Looking around the country, 13 regions saw an improvement in affordability over the most recent quarter, while only three regions saw a decline.

Further, over the past 12 months only four regions are showing declines in affordability.

Northland saw the biggest improvement in affordability over the most recent quarter: it improved by 11.6%, largely due to a decrease in the region’s median house price.

The region also saw an 11% improvement in annual affordability. This was second only to West Coast, which has improved by 22.5% over the past year.

At the other end of the scale was Gisborne which saw the biggest decline in affordability over the past year. It was down by 44.1%.

White says Gisborne’s decline in affordability has been driven by increasing prices. “In the most recent quarter, alone, the region’s median house price when up by 12.8% or $50,000.

“The Real Estate Institute attributes this increase in Gisborne to strong growth in higher-end properties, combined with strong demand and limited stock availability.”

Meanwhile, the national house price-to-income ratio is also showing improvement for the quarter, with house prices moving from 8.8 to 8.9 times annual wages.

Auckland remains the country’s least affordable region and median house prices there are 12.2 times annual wages.

 

Tags: affordability Auckland house prices housing market interest rates Massey University\ Mortgage Rates mortgages property investment real estate

« Affordability key to value growthStronger market on the cards »

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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 7.79 7.39 7.25
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 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
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 7.27 6.65

Last updated: 28 May 2024 11:21am

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