Hope amid housing affordability gloom

Lower mortgage rates would be a boost to house-hunters with a new report forecasting home affordability to continue to deteriorate this year. Photo / Chris Skelton

The Reserve Bank's indication that its next interest rate move could be down is expected to reinforce a decline in fixed mortgage rates.

The kiwi dollar dropped against the US dollar and wholesale interest rates also fell following yesterday's announcement.

Lower mortgage rates would be a boost to house-hunters with a new report forecasting home affordability to continue to deteriorate this year.

The latest Massey University Home Affordability Report shows houses across New Zealand decreased in affordability by 14.1 per cent over the year to November.

"In some regions the annual worsening in the affordability index has been kept at single figures, but the majority of regions are into double figures," said the report's author, Professor Paul Gallimore.

The decrease in affordability was driven by rising house prices and increased borrowing rates, he said. A rise of more than $30,000 in the national median house price, coupled with a 0.46 per cent increase in interest rates, far outstripped the $19.35 increase in the average weekly wage, Professor Gallimore said. "What this means is that a progressively higher slice of people's income is needed to fund home buying."

Auckland continues to top the list of the least affordable regions, at 40 per cent above the national median.