Homes become less affordable for Kiwis
Home ownership for people in Palmerston North continues to creep further out of reach, with lower disposable income and higher house prices to blame - and it is hitting both first-home buyers and those on larger incomes.
The latest Roost home loan affordability report says it would take 40.3 per cent of the average income of a person in the 25-29 age group to pay the mortgage on the average Palmerston North house.
It is a significant change from the 38.6 per cent of an income required to pay a mortgage a year ago.
Any number over 40 per cent is considered unaffordable.
First-home buyers have also found it difficult having to spend 40 per cent of their income to pay the mortgage on a house in the bottom quarter of the price range.
The report put the rise in unaffordability down to two things: people having less disposable income, and higher house prices.
While the median weekly take-home pay for a buyer was up 2.5 per cent year-on-year to $816.03 in December, weekly disposable income - wages minus mortgage payments - was down from $488.49 in December 2012 to $486.79 for the same month in 2013.
"This measure shows that the typical buyers' income is just too low by itself to afford the mortgage payments on the median-priced home," the report said.
The average house price was up by 6.6 per cent in the past year, hitting $283,000.
That was also well above the average house price from five years ago of $250,000.
Interest rates also rose, with the average floating mortgage rate going up by five basis points to 5.78 per cent.
That should lead to more people fixing their mortgages, the report said.
On the bright side, homes are still more affordable in Palmerston North than in most of the rest of the country.
It takes, on average, 60.7 per cent of an income to pay the mortgage in New Zealand.
First-home buyers are also having a tough job, having to spend 51.5 per cent of their income to buy a house among the cheapest quarter of properties in New Zealand.