Housing affordability falls for first-home buyers

At a national level, the share of potential first-home buyer households with below-average incomes after housing costs increased to 80 per cent. Photo / Doug Sherring

Finding an affordable house is getting harder for first-time buyers, according to data from the Ministry of Business Innovation and Employment.

The Ministry of Business Innovation and Employment (MBIE) latest Housing Affordability Measure data showed the major change was a worsening in affordability for first-home buyers at the national level, driven by higher house prices in Auckland, Wellington, Christchurch, Hamilton and Tauranga.

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In the previous report Christchurch and Wellington had been improving and Auckland's affordability was largely stable.

The latest results cover the year to March 2017.

By contrast, rental affordability was largely stable at the national level, with an improvement in Auckland and Tauranga, a flat result in Hamilton and Wellington, but a worse outcome in Christchurch.

At a national level, the share of potential first-home buyer households with below-average incomes after housing costs increased from 77 per cent in March 2016 to 80 per cent in the same month last year.

Nationally, the share of renter households with below-average incomes after housing costs was unchanged at 61 per cent.

The Housing Affordability Measure uses household-level data from the Statistics New Zealand Integrated Data Infrastructure (IDI) to provide a detailed picture of housing affordability trends.

MBIE said affordability was calculated by using data from the IDI to measure income at the household level. Housing costs – the rent lodged on tenancy bond forms for renters and mortgage payments, rates and insurance for potential first-home buyers – were then subtracted.

The remaining household income is then adjusted to reflect the fact that larger households generally need larger incomes.

The share of potential first-home buyer households in Auckland with below-average incomes after housing costs increased from 83 per cent to 84 per cent, while the share of renter households with below average incomes after housing costs dropped from 55 per cent to 54 per cent.

The Real Estate Institute of New Zealand is due to release the latest values and volumes data tomorrow.