Housing is slowly becoming more affordable for first time buyers in most parts of New Zealand, according to interest.co.nz's latest Home Loan Affordability Reports. However, the improvements are small enough that most aspiring purchasers probably wouldn't notice the difference, which sees them better off by $18.05 a week in July compared to March.
The reports track movements in dwelling prices, mortgage interest rates and incomes in 41 locations around the country to see how much of a typical first home buying couple's weekly income would be devoted to mortgage payments on a lower quartile-priced home in each area.
Since March, the REINZ reports that the lower quartile selling price dropped nominally from $381,000 to $377,707 in July. Compare this to the sustained period of rapid price growth and worsening affordability experienced over the past five years, where national lower quartile-priced house prices increased by 39.9%, from $270,000 in July 2013 to $377,707 in July this year.
Mortgage interest rates also declined in the last quarter, with the average two-year fixed mortgage falling from 4.67% in March to 4.63% by July. This means that weekly mortgage payments on a lower quartile-priced home dropped from $366.66 in March to $360.20 in July.
On top of this, incomes have been slowly rising, with interest.co.nz estimating that the national median take home pay of typical first home buying couples (both aged 25-29 and working full time at the median pay rate for their age group) would have increased from $1598.89 a week (after tax) in March to $1610.48 in July.
It may be just a small improvement but it’s a step in a positive direction and the trend is apparent in most parts of the country, except Queenstown, where prices have gone through the roof!
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Aside of interest.co.nz’s conjectures, evidence from local markets certainly show the proportion of homes sold to first home buyers has grown substantially throughout the nation and with the formalization of the Act establishing The Government’s foreign buyer restrictions that trend might be enhanced as prices seem surely to contract in many areas.
Unlike in many areas of Australia, where there’s been ongoing and debilitating drought, NZ has experienced a cold and wet winter, so the usual positive effects of Spring sunshine and warmth could even more noticeable in the real estate markets this year.
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