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A home loan affordability index shows the cost of a mortgage rose in May to 79.3 per cent of the average weekly take-home pay.
Interest rate comparison website, www.interest.co.nz, said the national rate of affordability was only up marginally from April (79.2 per cent) but well up on April last year (66.8 per cent).
The website said five years ago, it took only 46.3 per cent of take-home pay to make a mortgage payment on a median house.
David Chaston, the publisher of interest.co.nz, said during May, there was a 0.3 per cent rise in the median house price, a rise in benchmark interest rates to 8.79 per cent, and a $1.40 increase in weekly take-home pay estimates to $671.65.
He said house prices and interest rates were rising faster than take-home pay.
Weekly take-home pay had risen $28.34 in the past year, while weekly mortgage payments for a median price house have jumped $103.01.
Mr Chaston said since May, the official cash rate had risen 0.25 per cent. If June's house prices remained unchanged, the housing affordability index would rise to at least 81.9 per cent of average take-home pay.
"This would be the worst affordability [that] has ever been, and there is no real sign the situation is about to be reversed," he said.
It would take 16 years of current take-home pay increases to bring the index back to the point where 40 per cent of an average income could afford a median priced house.
Unless there were major policy changes, the crisis would continue for a long time, and urgent action was needed to remove barriers to building new houses, Mr Chaston said.
The index's base home loan is 80 per cent of whatever the median house price is.
- NZPA
