In this section
Offers for readers
The comment stream
Recent comments
- 1 of 19072
- ››
Editors choice
- 1 of 274
- ››
Finance sector jobs
This position is in the Investment Operations team within MLC's Asset Management business ...more
Australia
Provide L&D support for all technical requirements for the business banking teamBuild a st...more
Australia
We are looking for a highly skilled Pega Development Lead, who is capable of leading a tea...more
Australia
You will use your actuarial and statistical expertise to provide technical advice to achie...more
Australia
The news stream
Latest news
Most commented
- Wednesday's Top 10 with NZ Mint 52
- Tuesday's Top 10 with NZ Mint 47
- Crafar Farms OIO approval justified 36
- A $72K losing position? 34
- Home loan affordability better in Dec 22
- 90 seconds at 9 am with BNZ 21
- Govt lifts minimum wage 50 cts to $13.50 an hour 12
- Amanda's Take Five for Tuesday 12
- NZ economic growth still underestimated 11
- Amanda's Take Five for Wednesday 10
Most viewed
Interest on Twitter
Affordability improves a bit in January after median house price fall
New Zealand home loan affordability improved slightly in January after a fall in median house prices more than offset a small increase in fixed mortgage rates, Interest.co.nz's home loan affordability report shows. Affordability improved most in Wellington and in the region around Queenstown as median prices slid the most there. However, Queenstown is still the most expensive housing market in New Zealand relative to incomes, but is now only slightly worse than Auckland. Affordability is only just better than its worst levels since early 2007 near the peak of the housing boom, the monthly measure calculated by Interest.co.nz found. "The sharp drop in house sales volumes and the fall in the median house price in January has helped affordability as home buyers held back because of uncertainty around tax reform," said Interest.co.nz Editor Bernard Hickey.
"New listings are also hitting the market as some landlords look to exit the market before property tax changes are announced in the May 20 budget. That may nudge house prices lower and further improve affordability through the middle of 2010," Hickey said. 
The Home Loan Affordability measure for all of New Zealand showed the proportion of a single median after tax income needed to service an 80% mortgage on a median house fell 1.5 percentage points to 62.1%. The median house price as measured by REINZ fell in January to NZ$350,000 from a record NZ$360,000 in December and remains 7.7% above its January 2009 trough of NZ$325,000. The average 2 year fixed mortgage rate, which has been among the most popular with borrowers in recent years, rose 5 basis points to 7.25% over the month and has now risen from an average 5.92% in February last year. Variable mortgage rates, meanwhile, were flat in the last month at an average 6.00% and are now at their lowest level in at least 7 years, meaning some borrowers may choose to go variable rather than fixed to improve their immediate affordability. "An expected rise in interest rates in the second half of 2010 will keep the pressure on affordability unless the fall in median house prices seen in January continues through the rest of the year," Hickey said. Affordability hit its worst level of 83.4% in March 2008 just after house prices peaked and 2 year mortgage rates were close to 10%. 
Many home buyers jumped in March, April and May of 2009 to take advantage of lower interest rates and look for bargains, which improved the number of houses sold and boosted prices. But short term mortgage interest rates flattened out in late March and longer term mortgage rates began to rise in line with rises on wholesale markets and higher local term deposit rates. House sales volumes flattened off in the last three months of 2009 as first home buyers and rental investors stayed away, leaving most of the activity at the top end for owner-occupiers using equity stored up during the 2002-07 boom or trading down to reduce debt. Volumes slumped in January. Affordability is now often out of reach for most home buyers on a single income. The threshold proportion of after tax income considered prudent to sustainably own a house is around 40%. Anything above that is starting to become unaffordable. Affordability for the typical first-home-buyer worsened slightly in January. The proportion of a single after tax pay needed to buy a first quartile house rose to 55% from 54.8%, which is the highest level since November 2008. The first quartile house price was unchanged in January at NZ$255,000. This measure is for a median income earner aged 25-29 buying a first quartile home. Interest.co.nz thinks the "˜affordable' threshold is 40% for such a home buyer. Meanwhile, affordability for households with more than one income improved marginally, but are near levels last seen at the end of 2008. This measure of a "˜standard typical household' found the proportion of after tax income needed to service the mortgage on a median house fell to 40.8% from 41.8% in December. This measure assumes one median male income, half a median female income aged 30-35 and a 5 year old child that receives Working for Families. This remains near the worst level of standard household affordability since November last year and significantly above the 35% trough seen in January, February and March, when buyer demand returned to the housing market. Any level over 40% is considered unaffordable for a household. Our measure of a "˜standard first-home-buyer household' found the proportion of after tax income needed to service the mortgage on a first quartile home rose was 26.1% in January, up slightly from 26.0% in December. It has worsened from its best levels of 22% in February and March when some first-home-buyers returned to the market. This measure peaked at 35% in June 2007. This measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household. Southland remains the most affordable region for home buyers with a standard affordability measure of 35.3%, while the Central Otago Lakes (Wanaka and Queenstown) is the least affordable on 78.5%, although it is being quickly caught by Auckland on 75.1%. Central Otago affordability has improved from a peak of 137.6% in July last year as apartment prices have crashed in the wake of the collapse of several finance companies. Wellington's affordability improved to 61.6% from at 65.4% and Christchurch affordability was steady at 58.5%.
37 Comments
Auckland's population is predicted to
Auckland's population is predicted to swell to close to two million over the next 21 years - what impact will this have on house prices?
Figures released today indicate some 60 per cent of the country's population will be living in the region by 2031. That is an increase of almost 600,000 people, from 1.3 million to around 1.9 million.
According to Statistics New Zealand, of the country's 73 territorial areas only 44 are expected to have more people living in the area by 2031
2031..... Well, I predict...... Feel
2031.....
Well, I predict......
Feel free, no one will remember
who cares.. 2031 by then
who cares.. 2031 by then NZ will be part of Australia and Australia will be just another province of China. For me, I will be rich and famous living on a huge yatch in Cayman Island.
Major infrastructure failures such as
Major infrastructure failures such as the one's from Telecom, Public Transport and others can not be fixed by many thousand's, clever Real Estate agents, even when house affordability is improving a bit. We must remodelling our economy.
ahem... If those predictions include
ahem...
If those predictions include jobs for that extra population, then you could correctly assume that kind of growth 'could' happen...
Oh, bugger those inconvenient "IF''s"...
Auckland is already overcrowded, its
Auckland is already overcrowded, its infrastructure stretched to capacity, traffic, pollution and conjestion levels have overshot and its appeal as a city to live has diminished. But hey, we can all look forward to it getting worse as it grows towards 1.9 million and beyond. But hey house prices will keep going up, so I guess that is all that really matters right?
Latest mortgage approvals data: again
Latest mortgage approvals data: again weak, actually fell from 2nd week of Feb. to 3rd week
http://www.rbnz.govt.nz/statistics/monfin/c16/download.html
Mortgage approvals now cumulatively considerably weaker than equivelent 13 week period one year ago.
By the looks of it housing sales will be somewhat better than January, but considerably worse than last February (and considerably down on the turnover in October, November and December).
So constrained turnover but rapidly mounting inventory (REINZ data last week was talking about sometimes 700 new listings A DAY).
Wonder what thats going to cause? Its deja vu all over again (or late 2008 again for the housing market).
Guess so, MattS. Or we
Guess so, MattS. Or we could do a 'Canberra' or mooted 'Jakarta' and move the whole lot ! Now where should we move it too.....
Very useful data Andy..... In
Very useful data Andy.....
In Hamilton the house listings on trademe has increased like 15%+ (roughly 1150 to 1370) since January.
<i>Auckland’s population is predicted to
Auckland's population is predicted to swell to close to two million over the next 21 years "“ what impact will this have on house prices?
The median house price should track median household incomes. What we've seen in the last decade is a debt-fueled aberation. Its hard to see the debt driven increase happening again (although who knows - we can always try).
You need to consider that the median house will be different in 21 years. It (probably) won't be a 3 bedroom house in Mt Roskill. It might not even be a single family house (although I'd expect it will be). If population increases that far you'd expect either:
a) a commensurate increase in the number of dwellings (with people per dwelling staying the same); or
b) a less than commensurate increase in dwellings, with increasing numbers of people per dwelling (this would potentially lead to higher household incomes, and more rapid median price growth).
My 2c.
Broccoli is a bit down
Broccoli is a bit down by 2.5% in January but Koliflower is a bit up by 1.5% in February
But Major infrastructure failures such as the one's from Telecom, Public Transport and others can not be fix and are increasing, even when house affordability is improving a bit. We must remodelling our economy.
Walter
You are so right, we
You are so right, we just need to get rid of the bee hive or needs a good hard kick in the Ar..
@W. Kunz Says:
February 24th, 2010 at 2:56 pm
Major infrastructure failures such as the one's from Telecom, Public Transport and others can not be fixed by many thousand's, clever Real Estate agents, even when house affordability is improving a bit. We must remodelling our economy.
Actually I reckon Aussie is
Actually I reckon Aussie is gonna have a HUGE property bubble burst .... once China decides it can rort Africa's mineral resources, at a much lower cost than Aussie, THEN the fun will start .... btw Sydney has the 2nd highest housing affordibility index in the world.
So peeps, let's start saving and grab some aussie RE bargains in the near future :)
Not sensible bullfrog11. Sounds like
Not sensible bullfrog11.
Sounds like they've just turned their houses into matchboxes.
http://www.businessweek.com/news/2010-02-18/australia-says-home-insulati...
And vancouver's the highest, and
And vancouver's the highest, and serious question marks over whether that's about to pop (its basically being supported by people buying houses on minimal downpayment, 5% interest rates and 35yr term, which is borrowing at ~7x income...)
For those that haven't seen
For those that haven't seen this bubble-stages chart;
http://www.moneyweek.com/investments/property/~/media/MoneyWeek/2009/091...
I'd say we're in the bull trap stage with the RE agents vigorously promoting the "return to normal" at the present time.
Carrot is a bit down
Carrot is a bit down by 2.5% in January but gooseberry is a bit up by 1.5% in February.
But Major infrastructure failures such as the one's from Telecom, Public Transport and others can not be fix and are increasing and so unemployment too, especially among young people. We must kick our politicians to weak up for a remodelling of our economy otherwise our society doesn't live safe and happy even when house affordability is improving a bit.
@KW John .... mmmm not
@KW John .... mmmm not so sure, rather have a problem that can be solved like insulation, than an overpriced leaky building that Auckland is full of.
@Kate.... Great chart ! thank
@Kate.... Great chart ! thank you.
Now we have to get this out to the masses. Perhaps we could change the now "bull trap" phase to the "bull sh*t" phase with all the "skewed" data and reports from the RE industry et al.
TBM wrote - "Auckland’s population
TBM wrote - "Auckland's population is predicted to swell to close to two million over the next 21 years "“ what impact will this have on house prices?"
If population grew but GDP and number of jobs did not grow, then that would be disastrous. When more are unable to find work, then they would likely go for benefits. When more are unable to find work, then they might have to sell their houses in the end. Ultimately, prices would fall, and maybe more mortgagee sales may occur. Include unemployment and GDP and social impact into the prediction of house prices if you want, otherwise, no point predicting long term house prices based on just population prediction alone.
@Bullfrog I've just spent 5
@Bullfrog
I've just spent 5 mins trying to overlay 'Kate's' chart on the median house price one on this site (for amusement only, not serious),
Jan 09 start point is a good match for Kate's bulltrap thesis. But I bet it started much earlier really - just the data, couldn't find an old enough tree, and I've got a very messy desk, and..... well I have trouble "˜keeping track' of the information.
New Zealand has too little
New Zealand has too little population, thats why we are going to have more people coming here, otherwise the economy just cant keep up, this won't stop and won't change.
House prices are going to rise like rents, food and power. Its not about what people can afford, people eventually just get use to it. Got to miss the days when you can get a nice chicken pie for $1.50.
Last Saturday night I went out for a drive with my partner to check out some newly developed areas, lots of newly built houses, some still in construction.., anyway, at 10pm at night, we weren't the only ones there! There were at least 8 cars we saw driving around, and people were standing on the sections, walking around the footpath, all couples, families, home buyers to be. Funny to see how they all looked so serious on their face and at the same time trying to hide the excitement in their eyes.
The big dream of owning their own territory aye kiwis.. cute.
Grandy worte - "If population
Grandy worte -
"If population grew but GDP and number of jobs did not grow, then that would be disastrous. .....When more are unable to find work, then they might have to sell their houses in the end. Ultimately, prices would fall.......Include unemployment and GDP and social impact into the prediction of house prices........
This makes me laugh.....you need to go travel around the world and see.
People have no job because there ISN'T enough business around to hire.
Why is there not enough business? Because the market is too small, the demand is small, the population is small. Businesses cant be bothered making small money out of this small market.
Money will go wherever people go, theres people theres money.
small kev wrote - "...Money
small kev wrote -
"...Money will go wherever people go, theres people theres money......"
This makes me laugh ...... really, it makes me laugh!
Hi there. I'm fairly new
Hi there. I'm fairly new to this site. I'm loving the community here, so I want to contribute to everyone this article I read that really changed my life financially. Last week I got a check for $900! Really, no joke, I thought I couldn't do it myself, but I did. And it really helped me out my family financially because i'm a stay at home mom.hopefully it works out for you too. Good luck and God bless!
*****************************
johndouglas
Grandy wrote small kev wrote
Grandy wrote
small kev wrote "“
""¦Money will go wherever people go, theres people theres money"¦"¦"
This makes me laugh "¦"¦ really, it makes me laugh!
So happy that you've learn something today?
And theres something else for you to learn " if theres no people, there will be no money at all". And please don't give me the treasure Island fairytale. :)
"are going to rise like
"are going to rise like rents"
This, and most things except house prices, medical costs and government spending have increased by approximately inflation or inflation plus GDP/population growth/wage growth.
House prices, medical costs per capita and govt spending per capita all need to adjust down, if you think about it.
@small kev population of Melbourne,
@small kev
population of Melbourne, Australia 3,806,092 (June 2008).
And Australia wants to grow.
Unsure whether the consensus here is for population growth or not.
I don't think we currently have the luxury of choice - but others clearly feel we do.
Hard to see how we
Hard to see how we can accommodate much growth AND get our greenhouse gases down, even with significant technological change
@small kev, " .....if theres
@small kev,
" .....if theres no people, there will be no money at all...." It makes me laugh.
So you do learn something today? I hope you do.
KW John worte "population of
KW John worte
"population of Melbourne, Australia 3,806,092 (June 2008).
And Australia wants to grow."
Thats right, hence almost everything over there is higher than here.
Similar living but more people and more busy.
In the future will people
In the future will people come to the region because of jobs or because or social interests? If it is for jobs then commuter towns could be the go, fast train from Hamilton... Helensville... If it is for social interests then more land needs to be made available preferably around transport hubs. Electric trains = low green house emmisions. Each station (think of growth from Swanson to Helensville) is the epicentre of each town with the housing density high around each station on the way and lowering as it is further out (from each station). Trains would have to be faster than they are now to get people to work at a resonable time. (considering the rail at present gets it's electric upgrade, the cbd rail tunnel, airport link and Avondale - Southdown line is built) That'll do it I think, room for lots of people, but you need to get people moving which makes everything else move. (economy...) As for home loan affordability at present, I think homes are still over valued & the real estate kings are misleading the general public by saying things like .... http://www.interest.co.nz/ratesblog/index.php/2010/02/23/harcourts-nz-ce...
small kev Is Spain's population
small kev
Is Spain's population about 10 times more than ours? If so, based on what you have been writing, is Spain having 10 times (or more) money than here???
Trudy why trying? People don't
Trudy
why trying?
People don't seem to get my point, if you were to open up a business, would you pick a ghost town or a busy and well populated city with lots of demand? Its your call.
If you going to pick ghost town then i have nothing to say.....
Simple, you'll have way more chances with more people.
No people = No demand = No business = No job
Theres always going to be poor people even in the richest country.
Who cares about population and growth as long as you know how to work WITH the system anyway?
small kev "why trying?" I
small kev
"why trying?" I have no time trying with you.
If can't take disagreement, then why join in the discussion?
2 million people in Auckland....better
2 million people in Auckland....better order some more Nippon clip-ons for the bridge then....oh and build a new marina to host the Americas Cup which we will have won back by then......
Hi small kev, you're thinking
Hi small kev,
you're thinking corner dairy.
If I had a manufacturing plant to build, I'd want the ghost town - cheap land prices, probably cheap rates, the locals would be glad of the jobs so the NIMBYs wouldn't be complaining. There'd be little competition for labour, so folk would probably be happy to train up and I'd be less likely to lose them once trained. And I'd be IMPORTANT to the local pollies, so they would most likely see things my way. Especially if it's a world-class product and I'm exporting - all I need is good transport to a port.
And I'd do a lot more for GDP than a corner dairy, too.