Housing affordability worst in three years

Last updated 05:00 24/06/2013

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Rising housing prices chipped away at housing affordability in May, sending it to its worst level in almost three years.

According to mortgage brokerage Roost, it now costs someone on a single median income 56 per cent of their take-home pay to service an 80 per cent mortgage on a medium-priced house.

Affordability worsened 0.1 per cent from April because of a $2000 rise in median house prices.

Auckland's North Shore was deemed the least affordable place for first-home buyers, costing 95 per cent of a single income to service a mortgage.

Elsewhere in Auckland, first-home buyers were nearly as pressed. A cheap house in South Auckland cost a single buyer nearly 88 per cent of their wages.

Any level over 40 per cent of income is considered unaffordable.

For working households with two incomes, a mortgage used up 37.1 per cent of their after-tax pay.

Roost spokeswoman Colleen Dennehy said that with wages remaining virtually static, it was only unchanging interest rates that was preventing housing affordability from getting worse.

First-home buyers in big cities would find things even more difficult if the Reserve Bank moved to put restrictions on low-deposit home loans.

Roost had already seen some banks tighten their rules around low deposit lending in the last month, by reducing the availability of 90 per cent-plus mortgages or raising interest rates.

Although affordability eased only slightly in many cities, it deteriorated notably in Tauranga and Nelson where there were sharp price rises.

Tauranga rose from 51.8 per cent in April to 57.3 per cent, while Nelson grew from 53.2 per cent to 56.7 per cent.

In Christchurch, affordability was 58.1 per cent of a single income, from 57.7 per cent in April. It improved in Wellington where a mortgage cost 56.7 per cent of a single income, down from 60.1 per cent in April.

Other cities to improve were Whangarei (37.5 per cent), Palmerston North (38.2 per cent) and the country's most affordable city, Wanganui (28.2 per cent).

Contact Catherine Harris
Business reporter
Email: catherine.harris@dompost.co.nz

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- The Dominion Post


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