Homes more affordable as interest rates fall, wages increase

Photo / Herald on Sunday

Buying a home became more affordable in the last quarter as house prices sank, mortgage rates fell and wages increased, the latest Home Affordability report from Massey University shows.

The median house price now stands at $350,000, Massey University's real estate analysis unit director Professor Bob Hargreaves said.

Central Otago Lakes was again the least affordable region to buy a home, followed by Auckland and Wellington, while Southland retained its spot as the most affordable region in the three months to the end of February.

The national affordability index improved six per cent during the quarter, with the median house price falling 10 per cent during the quarter.

A fall in interest rates from 6.63 per cent to 6.59 per cent and an increase in the average weekly wage - from $972.69 to $991.05 - also drove affordability during the quarter, Hargreaves said.

"The housing market continues to be characterised by very low turnover rates, flow on effects from the Christchurch earthquakes, a firming of house prices in Auckland, expectations that mortgage interest rates will remain stable in the short term and an exodus of New Zealanders to Australia," he said.

Seven out of 12 regions showed improvement in affordability during the quarter.

Affordability improved in; Canterbury/Westland 9.1 per cent, Waikato/Bay of Plenty 4.9 per cent, Auckland 4.8 per cent, Nelson/Marlborough 0.7 per cent, Otago and Wellington both 0.6 per cent and Manawatu/Wanganui 0.5 per cent.

Professor Hargreaves says the Canterbury/Westland data should be treated with caution since it reflected the small number of house sales in a market disrupted by the earthquakes.

The five regions showing quarterly reductions in affordability were Southland 5.8 per cent, Hawkes Bay 4.7 per cent, Northland 4.6 per cent, Taranaki 3.3 per cent and Central Otago Lakes 1.7 per cent.

- NZ HERALD ONLINE