Home affordability slips for first-time buyers

A measure of home loan affordability shows almost no change overall in November, although affordability worsened in Auckland and Northland and for first home buyers.

The BNZ home loan affordability measure for November, published today, calculated it now takes 61.8 percent of one median income to pay the mortgage on a median priced house. That edged down from 61.9 percent in October, and is below the 64.4 percent a year ago.

Interest.co.nz, which calculated the measure, said affordability remained at its worst levels nationally since November last year and had degraded faster in late 2009 than at any time since the peak of the housing boom in early 2007.

House prices held steady nationally last month, while a slight increase in income was offset by slightly higher interest rates.

But affordability worsened in Auckland and Northland, because of rising house prices in those regions. Prices for lower cost houses also increased.

Interest.co.nz editor Bernard Hickey said recent growth in house prices appeared to have run out of steam, while the outlook for higher interest rates next year had taken some of the heat out of worsening affordability but only while house prices were stable or falling.

The possibility of tax reform might also be making property investors more uncertain.

The latest report shows it takes 76.8 percent of a median income to pay the mortgage on a median-priced Auckland house bought in November, up from 74.5 percent in October.

Using the measure's standard household profile, 50.3 percent of median household take-home pay is needed to service a mortgage on a median Auckland home bought in November, up from 48.7 percent in October. Nationally, the household figure is 40.6. percent.

Auckland is again catching Queenstown, where house prices are falling, as the least affordable region.

For typical first-home buyers, the proportion of a single after tax pay needed to buy a first quartile house rose to 54.4 percent from 52.8 percent in October. The first quartile house price rose in November to $257,000 from $250,000 in October.

- NZPA