Home ownership became very slightly more affordable for first home buyers in December, particularly in Auckland and Christchurch, according to the latest AMP360 Home Loan Affordability Report.
The AMP360 report measures the ability of someone on the median income for people in the 25-29 year old age group, to purchase a home at the lower quartile of selling prices in their region.
This showed that servicing the mortgage on a house at December's lower quartile price of $305,000 would have taken 53.8% of a first home buyer's take home pay compared to 53.9% in November, making it just slightly more affordable.
The monthly change was driven by the lower quartile price rising by just 0.06% for the month, while take home pay rose by less than a dollar a week and mortgage servicing costs declined by a few cents.
However housing is still less affordable than it was a year ago when servicing the mortgage on a house priced at the lower quartile would have required 51.9% of a first home buyer's income.
Four years ago that would have required 47.6% of a first home buyer's income.
However there was a bigger improvement in affordability for first home buyers in Auckland and Christchurch.
In the Auckland region, servicing the mortgage on a lower quartile-priced ($546,800) home would have required 99.7% of a first home buyer's income, down from 100.1% in November, but still well up on the 86.6% required in December 2013.
In Christchurch, servicing the mortgage on a home at the lower quartile price of $367,300 would have required 65.4% of a first home buyer's income, down form 69.1% in November.
That was mainly driven by a 4.8% drop in the lower quartile price compared with the previous month.
However Wellington went against the trend and housing affordability in that region worsened slightly for first home buyers in December, due mainly to the lower quartile selling price rising to $332,700, a 0.4% increase compared to November.
Servicing the mortgage on a home at that price would take 56.9% of a first home buyer's income, compared with 56.7% in November and 53% in December 2013.
To access the full AMP360 First Home Buyer Affordability reports for all parts of the country, click on this link.
No chart with that title exists.
---------------------------------------------------------------------------------------------------------------------------------------
Our free Property email newsletter brings you all the stories about residential and commercial property and the forces that move these huge markets. Sign up here.
To subscribe to our Property newsletter, enter your email address here. It's free.
----------------------------------------------------------------------------------------------------------------------------------------
5 Comments
A bubble occurs when speculators notice the fast increase in value, and buy in anticipation of further rises, not because the asset is undervalued. Speculators are just hot air, doesn't matter where they come from. No doubt those foreigners have alreay lost money this year with the NZD falling.
It wont push lower, it will crash, down to a level where first homebuyers can afford to enter the market, and property investors can get positive cashflow from rentals. My guess is around 350k. It could start this year, or things could keep going for a few more years, but it is very easy to predict a bubble will burst, timing it is very hard.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.