Lower house prices and continued low interest rates have combined to make New Zealand homes the most affordable they've been in the last decade.
AMP's home mortgage affordability survey, recently completed for the June quarter, shows that houses are 42.8 per cent more affordable than they were a year ago. All 11 regions measured improved in affordability, with Auckland and Southland still the least and most affordable regions respectively.
However, AMP/Ergo Managing Director Robyn Clubb noted that longer term interest rates were starting to rise and this could make it harder to afford a home. "AMP/Ergo urges those buying to combine both floating and fixed rates to maximise flexibility in their loans."
Highlights of the latest report include (see table below for regional details):
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AMP's home affordability index improved 1.9 per cent over the June quarter to 15.99 for New Zealand overall.
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The improvement was helped by a fall in median house prices, which were down 1.3 per cent over the June quarter in spite of increased house sales.
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Just three regions have become less affordable than they were in the March quarter: Northland, Nelson and Waikato/Bay of Plenty. Each of these also recorded a lift in their median house prices during the quarter.
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Compared with a year ago, Otago has shown the strongest gain in affordability (48.3 per cent), followed by Nelson (45.3 per cent) and Auckland (45 per cent).
Massey University's Real Estate Analysis Unit prepares a quarterly report on this index for AMP, combining regional statistics on average weekly earnings, mortgage interest rates and housing prices to create a measure of home affordability.
The regions, in order from most to least affordable (the lower the index figure, the more affordable the housing) are:
| REGION | Current index: June quarter | Improvement over last 12 months | | --------------------- | ------------------------------- | ----------------------------------- | | Southland | 7.20 | 36.0% | | Otago | 8.85 | 48.3% | | Taranaki | 9.19 | 39.6% | | Manawatu/Wanganui | 11.04 | 39.7% | | Hawkes Bay | 13.30 | 39.3% | | Canterbury/Westland | 13.94 | 44.7% | | Nelson | 14.54 | 45.3% | | Wellington | 15.05 | 43.2% | | Northland | 15.82 | 41.0% | | Waikato/Bay of Plenty | 15.98 | 41.7% | | Auckland | 20.77 | 45.0% |
