Manawatu homes among most affordable in NZ
Manawatu continues to be an attractive place to buy property, with home loan affordability well below the national average.
The Roost Home Loan Affordability survey, released this month, showed it would take 54.8 per cent of a single median income to service a mortgage in New Zealand.
But in the Manawatu/Whanganui region, it takes only 34.7 per cent, down on the 61.5 per cent from five years ago.
Only Southland was rated as more affordable.
While the median house price in the area increased by 3.2 per cent in the past year, hitting $227,000, it was well below national growth of 6 per cent.
Despite being under the national average, the report said it would still be hard to buy a house in Manawatu/Whanganui on one income.
"Essentially the median income for the typical buyer is not high enough to buy a median-priced house, even with a 20 per cent deposit," the report said.
"However, they may find the lower-quartile priced house is affordable.
"It is also true that a couple/family with more than one income may find the median house price is affordable."
A household - defined as a man on one income and a woman working part-time with a 5-year-old child - would need to spend only 22.9 per cent of their combined income to service a mortgage.
Overall affordability in Manawatu/Whanganui had improved.
"Wholesale interest rates have fallen noticeably since May and this is allowing some fixed rates to be reduced. Borrowers should check their options," the report said.
Massey University real estate expert Professor Bob Hargreaves said affordability was unlikely to change much any time soon.
Projected population growth in the region, while good, was minimal compared to other centres, he said.
"We've got this movement north so the demographic is different in Auckland, because everyone wants to go to Auckland."
Manawatu was likely to stay relatively stable because of the diverse nature of its economy, including defence and education, he said.
Having to spend 40 per cent or more of income on servicing a mortgage was deemed unaffordable by the report.
Prof Hargreaves said interest rates were the biggest factor in affordability, but did not help Manawatu more than anywhere else.
They were likely to stay low for some time because of the weak economic situation across the globe, he said.