Good news on the housing affordability front

Two recent pieces of housing news that caught my eye:

Now is not a bad time to go house hunting. The Home Affordability Report, a quarterly survey conducted by Massey University’s Real Estate Analysis Unit, shows an improvement over the last three months in the all districts national affordability index of 4.9 percent, and an annual improvement of 8.8%. In English, this means it has become a fair bit easier over the past 12 months to afford a house in New Zealand.

In the quarter ending February 2012, seven of the twelve regions showed increased affordability, notably Southland, with a 9.1 percent improvement, Auckland (6.0%) and Otago (4.9%). At the other end Northland, Hawkes Bay, Nelson/Marlborough, Wellington and Waikato/Bay of Plenty all became a little less affordable.

It seems the reason for this can be put down to a positive alignment of the stars. The key drivers used by the REAU to measure affordability are the national median house price, average weekly earnings, and the average monthly mortgage interest rate. And right now, they’re all looking pretty good. The median house price dropped to $355,000, the average wage rose by $4.06 and mortgage rates went down from 6.15% to 6.08%.

According to the REAU’s Professor Bob Hargreaves, it’s first time homebuyers who are reaping the most benefits thanks to “historically low mortgage rates, combined with more relaxed lending criteria by the banks”.

So that’s all pretty good news for the public, and especially first time buyers. It does, however, come with some caveats – something you may have suspected from their slightly ominous title ‘Home Affordability Improves – But For How Long?’

One source of future problems will be interest rates. Having been so low for a while now it’s clear they must go up at some point. We are also, according to the study, seeing demand rising strongly in Auckland and Christchurch. (Canterbury’s housing shortage meant it was the only region to become less affordable in the past year. But you‘d somewhat expect that, following what has just been declared the third most expensive insured natural disaster in history.)

The REAU also calculates how far above or below the national affordability index each region comes in at. At 125.5% of the index, Auckland retains its title as the most expensive place to buy a house, just pipping the Otago/Lakes region. And all the way at the bottom – appropriate, geographically speaking– is Southland, at just 54%.

The price gap could not be better illustrated than by this article on Stuff. Quotable Value has just announced the most expensive and cheapest houses sold in New Zealand last year.

At the top of the pops, this stunning Herne Bay home for a whopping $8.3 million.

The cheapest? This renovator’s dream in Ohai, Southland for just $10,000.

It’s fair to say, in terms of quality, most houses on the market likely fall somewhere in the middle. But whatever your taste now is a good time to take advantage of favourable conditions and see what’s out there.

Might I suggest you start by checking out our listings!

One thought on “Good news on the housing affordability front

  1. Pingback: September’s property report in short | Open2view

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