Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Home Loan Affordability report

interest.co.nz Home Loan Affordability report

For February 2017 - for immediate release

Housing affordability improving in Auckland as lower quartile prices slide for third consecutive month, latest Home Loan Affordability Reports show. Rising prices and interest rates took their toll in most other places

-------------

PLEASE NOTE: The new Reports covering a) First home buyers (aged 25-29 yrs), as a couple, b) second rung Young family buyers (aged 30-34), as a couple (with one partner working full time, one half time, and a 5 year old child), and c) second rung older families (aged 35-39) are now published on our website.

-------------

Buying a home became slightly more affordable for typical first home buyers in Auckland, Hawke's Bay, Manawatu/Whanganui and Taranaki last month, as falls in the lower quartile selling price more than offset rises in mortgage interest rates, according to interest.co.nz's Home Loan Affordability Reports for February.

However first home buyers in other parts of the country weren't so fortunate, as the combination of rises in lower quartile selling prices and rising mortgage interest rates took their toll.

The average two year fixed mortgage rate has risen steadily since it bottomed out at 4.35% in May last year and was 4.84% in February, taking it back to where it was in October 2015.

That is still extremely low by historical standards, however the trend is upwards and that will be pushing up mortgage payments.

The Home Loan Affordability Reports track the REINZ's lower quartile selling prices throughout the country and calculate how much of their take home pay a working couple aged 25-29 years who earn the median wage for their age group and location, would have to put aside for mortgage payments to buy a property at that price, using the average of the two year fixed mortgage rates offered by the major banks.

In the Auckland region, the lower quartile dwelling price (the price point at which 25% of sales are below and 75% are above), has declined for three months in a row to $669,700 in February, down by $47,500 (6.6%) since it peaked at $717,200 in November.

The combined median take home pay for an Auckland couple aged 25-29 is $1602.36 a week, and the mortgage payments on a lower quartile-priced home would be $724.87 a week, or 45.24% of their take home pay. That's before allowing for other property ownership costs such as rates, insurance, repairs and maintenance.

The threshold for affordability is when mortgage payments take up no more than 40% of take home pay, any more than that and the mortgage payments are considered unaffordable.

Factoring in the rise in interest rates and the fall in prices, mortgage payments on a lower quartile priced home in Auckland have declined from $753.53 a week in November to $724.87 in February, leaving a typical first home buying couple better off by $28.66 a week, before allowing for movements in after tax income.

Although that extra money would undoubtedly come in handy for anyone struggling to afford their first home, it doesn't change the fact that meeting the repayments on a lower quartile-priced home will still be a struggle for couples on average wages.

The only other place where mortgage payments would be less affordable than Auckland is Queenstown, where a combination of a high lower-quartile price ($729,282 in February) and relatively low median incomes ($1494.85 a week for working couples aged 25-29, just over $100 a week less than the median in Auckland), mean the payments on a lower quartile-priced home would take up 53.78% of their take home pay.

However in most other parts of the country, housing remains affordable for first home buyers.

In Tauranga the mortgage payments on a lower quartile-priced home would take up 33.4% of a typical first home buying couple's take home pay, in Wellington City it would be 31.7% and in Christchurch it would be 27.5%.

Whanganui is the cheapest place in the country for first home buyers, with the mortgage payments on a lower quartile priced home taking up just 9.6% of a typical first home buying couple's take home pay.


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Digitl: Download 2.0 – Vodafone Wi-Fi Calling hits early milestone
Vodafone says it has 10,000 customers using its Wi-Fi Calling service. It took less than three months to reach that milestone; the service began operating in September... More>>

Energy Resources Aotearoa: New Law On Decommissioning Could Be Costly Overkill
A new law on decommissioning oil and gas fields passed by Parliament today has good intentions but is overkill, according to Energy Resources Aotearoa. "We strongly support operators taking responsibility and paying the costs for decommissioning, which is what all good operators do," says chief executive John Carnegie... More>>


Commerce Commission: News Publishers’ Association Seeks Authorisation To Engage In Collective Bargaining

News Publishers’ Association of New Zealand Incorporated seeks authorisation and provisional authorisation to engage in collective bargaining with Facebook and Google. The Commerce Commission has received applications from News Publishers’ Association of New Zealand Incorporated (NPA) seeking authorisation and provisional authorisation on behalf of itself... More>>


ABC Business Sales: Demand High For Covid-proof Businesses
Despite the continuing challenges facing businesses in this Covid environment, right now there are more buyers looking for a small-medium sized business than there are sellers in the market... More>>


PriceSpy: Producer Prices Increase
New Black Friday and Covid-19 Report* released by PriceSpy says people’s fear of stepping inside physical shops during big sales events like Black Friday has risen since last year; Kiwis are still planning to shop, but more than ever will do it online this year... More>>

NZ Skeptics Society: Announce Their 2021 Awards, And Dr Simon Thornley Wins The Bent Spoon

Every year the New Zealand Skeptics presents its awards to people and organisations who have impressed us or dismayed us, and this year it’s been hard to pick our winners because there have been so many choices!.. More>>



REINZ: Sales Volumes Leveling Out

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 44 fewer lifestyle property sales (-2.6%) for the three months ended October 2021 than for the three months ended September 2021... More>>