Regions evenly split in January between those where lower quartile prices went up and those where they went down,'s latest Home Loan Affordability Reports show

Regions evenly split in January between those where lower quartile prices went up and those where they went down,'s latest Home Loan Affordability Reports show

Aspiring first home buyers are getting mixed signals from the housing market at the start of 2020, according to's latest Home Loan Affordability Reports.

The reports track movements in mortgage interest rates and the Real Estate Institute of New Zealand's lower quartile selling prices to plot changes in affordability at the lower end of each region's property market.

Interest rates remained very low by historical standards in January but retained the slightly firmer tone evident at the end of last year, while lower quartile price movements varied by region, sending mixed price signals to first home buyers.

The average of the two year fixed mortgage rates offered by the major banks was 3.54% in January, unchanged from December last year but up from its record low of 3.46% in October last year.

But January's lower quartile quartile selling price rose in six regions compared to December - Northland +2.5%, Waikato +4.3%, Bay of Plenty +10.1%, Nelson/Marlborough +9.0%, Otago +7.7% and Southland +5.9%), and declined compared to December in the other six - Auckland -0.6%, Hawke's Bay -4.8%, Taranaki -1.6%, Manawatu/Whanganui -1.6%, Wellington -11.8% and Canterbury -1.4%.

Four regions had record highs for their lower quartile prices in January - Northland $410,000, Bay of Plenty $533,750, Otago $410,000 and Southland $285,000. The only region to have a major reduction in the lower quartile price was Wellington, where it declined from $550,000 in December to $485,000 in January, putting it back where it was in July last year.

Overall, the national lower quartile price declined from $449,000 in December to $445,000 in January, which was the second monthly decline since it peaked at $450,000 in November last year. However the lumpiness of the regional figures made it difficult to pick a price trend at the start of the year except to say that prices generally remained at or near the top end of recent price bands.

The Home Loan Affordability Reports measure affordability by tracking the mortgage payments on lower quartile-priced homes as a percentage of the median after-tax wages for 25-29 year old couples in each region.

The mortgage payments are considered affordable when they take up no more than 40% of a couple's take home pay.

By that measure the mortgage payments on lower quartile-priced homes remain affordable for typical first home buyers in all regions, with the percentage of their take home pay they would need to set aside for the mortgage ranging from 14.5% in Southland to 37.4% in Auckland.

However although the mortgage payments would be affordable, raising a deposit would still be a challenge for many.

The reports calculate how much couples earning the median income for 25-29 year olds would have saved for a deposit if they set aside 20% of their after tax income each week for four years.

Ten years ago in January 2010, it would have taken less than four years at that rate of saving to save a 20% deposit for a home at the lower quartile selling price in all regions of the country except Auckland, where the savers would only have enough for a 18% deposit after four years.

So Aucklanders would have needed to keep saving a little longer to get their 20% deposit.

By five years ago, in January 2015, it would still have taken less than four years for typical first home buyers to save a 20% deposit, although the amount typical Auckland first home buyers could have saved to put towards a house had dropped to 14.6%.

But by January 2020 the deposit squeeze had spread well beyond Auckland and only four regions - Manawatu/Whanganui, Taranaki, Canterbury and Southland, had lower quartile prices that were low enough to enable a 20% deposit to be saved within four years.

In Auckland, typical first home buyers saving 20% of their  after tax pay would only have enough money for an 11% deposit on a lower quartile-priced home after four years followed by Bay of Plenty 13%, Nelson/Marlborough 14%, Waikato 16%, Wellington 16%, Hawke's Bay 17%, Northland 18% and Otago 18%.

That leaves aspiring first home buyers in those regions between a rock and a hard place.

Either they put off buying their first home and keep saving for longer to put together a 20% deposit, or they can try and buy a home with a low equity loan, which would significantly increase the size of their mortgage payments.

Either way, they don't face an easy choice.

The comment stream on this story is now closed.

Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke's Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand


  *This article was first published in our email for paying subscribers. See here for more details and how  to subscribe.


We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Comment Filter

Highlight new comments in the last hr(s).

Covid-19 is looking awfully like a giant pin in search of a bubble to pop.

First home buyers might want to consider letting someone else be the bag holder on this one.


Hmm. I'm very conflicted. We're looking at putting in an offer on our first home this week. But now I'm not too sure. It's home and income at over $1mil (our situation isn't typical for most first time buyers).

On one hand, so much gloom globally. Markets looking nasty. And that report doesn't look encouraging for Wellington. Not to mention all the issues with the houses quality (typical for Wellington) and it clearly over priced.

On the other, we've been here so many times thinking the pop was here, only to be left behind and house prices rise another +8% or so.

Can someone lend me their crystal ball?

hold.on till June 2020

He who hesitates is lost........

NZ is well placed for property investment. It's now seen as one of the more attractive locations in the world to reside.


By whom?

Hi Brook,

If you haven't figured that out yet, there's not a great deal of hope for you......

Try something else. Property ownership/investment is clearly not for you.


Answering a question with an insult?
This is the "sophisticated debate" you and Yvil wanted to see here?

You can't answer the question. By whom exactly?


This may be extremely shocking for you to hear, but some people actually buy houses to live in, not for investment purposes. I know it sounds crazy but it's the truth. In fact, in the vast majority of countries, it's meant to be a place to live.


Just wondering, in your mental model and understanding of how the property market works,

1) is there a linkage between property prices in the ownership market and the banking system?
2) if so, how are they linked?
3) what is the difference between UNDERLYING demand and EFFECTIVE demand in the ownership market?

"a sound investment can morph into a rash speculation if it is bought at an elevated price." - Warren Buffett

I could lend you mine, but I should be honest I use an empty bottle of Steinlager Pure Light for my crystal ball gazing.

It puts forward a possible future, where the bubble deflates this year nicely as we head into a period of fear and economic gloom. The price of the Wellington home takes 7 years to recover back. But the bank manager is also gloomy and despite the new lower house prices doesn't want to lend to you for the next 18 months...

(disclaimer: I'm not drunk)

It all depends on what you are looking for in a house. If you are looking for a cookie cutter townhouse in a monotonous suburb, then it may be worth waiting. If you are looking to purchase something unique, then buy it, because it will keep being unique.

Dose the 'income' cover a good portion of the interest payments?
Is your job recession proof?
Have you thought about low balling the price? If there is risk, the current owner may have to wear some of it.

Also following on. Some questions for consideration:
How would you cope financially if one income earner lost their job?
Could you still make the mortgage payments in such an event?
Does this house fit your needs for the next 10 years at least?

Owner occupiers want to be able to meet debt service repayments under ALL economic conditions (including a recession)

Some people are starting to lose their income in industries such as tourism, food and beverage, logging, & meatworks.
The probability of a recession in New Zealand has increased from 2-3 years ago.

We've done exactly that as a seller. Just sold a lifestyle property Kapiti. Got an offer on Sunday night for $40k less than we had said we'd except, but it was unconditional with a 3 month settlement. We looked at this virus and we took a punt.

But we could afford to take a risk. we now have debt free income bearing assets and a few hundred K in cash. But like he said we've been waiting for this Pop for a long time now.

Our philosophy has always been to buy a property we'd be happy to ride out a recession/crash in.

I wouldn't bother trying to predict the future. If you believe it's going to be a good medium-long term home for you and your family, and you can comfortably afford it, then why not go ahead with it?

northman46 - You have to be comfortable with what you do.
A home and income is excellent in providing that extra income, I always try to buy them for that reason.
The Virus - it's such a unknown but at any point in time there is always something going on that is out of our control that can be a reason to hold off.
If you intend to live in this place for the medium term it really doesn't matter.
The world is not about to end and any dip is followed but a spike.
I would imagine when this Virus is over there will be alot of people particularly Chinese trying very hard to find a new home out of China.
Keep a big picture .

Northman46, I would advise speaking to those who have a complete understanding of the property market such as real estate agents, mortgage brokers, banks. attend seminars,read unbiased property magazines and watch multiple home improvement shows to prop up your courage into obtaining home ownership. Then ask yourself a question, what happens to the NZD in the coming months , what happens to asset pricing , particularly those assets as you state are clearly overpriced, if and very likely our economy and confidence takes a prolonged hit. Why would you prop it up now.

Understandably you are nervous about committing to a home - the biggest purchase you will make. However, such nervousness when buying is not confined to either the current state of the market or your first home. No matter how many houses one may have bought, those who say that they don't have at least some apprehensions when buying are either liars or foolish; I have probably bought fifteen or so houses in my life time and every time there is a degree of apprehension - that is part of being cautious.
To me, the issue for any FHB is not about trying to time the market - no matter who you speak to regarding the market, they are not going to give you certainty. I recall buying my first rental back in 2003; I have a mate who who was a childhood friend and is a valuer of considerable experience, so I informally sought his advice and he advised that I should hold off as the market was flat - a year later he apologised to me that neither he not the other valuers saw a rapid rise in house prices coming. I take what those posting say about the future of the market with a grain of salt - especially these "know everything and unsubstantiated posters" who are in conflict with what those professionals with far greater knowledge and expertise are currently saying.
To me the more significant issues than the short term future of the market in order of importance for a FHB are;
- are you happy with the house, is it what you want for what for what you can afford
- are there any issues with the house in terms of weather tightness or other urgent need of significant repair such as repiling etc,
- are you going to be readily able to service the mortgage considering factors such as security of employment and possible changes to mortgage rates, and
- are you paying a fair price in terms of the market as confirmed by a registered valuation and not the RV nor one of the algorithm apps that are readily available (see note below).
If the house you are considering meets the above criteria then one should act.
Most important is to forget what the market is or is not going to do in the short term; short term fluctuations are totally irrelevant provided one can service ones outgoings as owning a home is a long term investment. I have read all the comments made above about the likely short term market trends; they are guesses and not certainties.
The only short term market risk that is going to affect you is that the market moves up, the home is going to cost you more as you have already experienced when house prices have gone up 8%.
Provided you can service the outgoings, you can be assured that even if the house market does pull back in the short term, if you go out in the morning you will have the same house. Long term one can expect the housing market to increase at least at the rate of inflation (and your equity is leveraged by your mortgage).
If you are looking for security; buy and pay down the mortgage as much as you can as quickly as you can.

Note: In terms of buying a house, it is common that one can often pay either 5% over or below "market value", yet you are fretting about the market moving by the same amount. Paying a fair price is more important and certain compared to the uncertainities of future market shifts.

Trust your gut. I wouldn't be rushing into any decisions right now.

I feel the same same boat ish but have purchased near top of speculative bubble in the past (in London in 06) and the only thing that saved me then was the rate drop. UK reacted with rules like 4.5 borrowing which clearly don't exist here. That experience has put me on the fence since I landed here as it has looked toppy for a while... Wgtn city median is stagnant based on REINZ stats... An affordablity ceiling looks like it might explain. Therefore waiting to see how this virus thing pans out on NZ economically seems the best approach as I missed the recent boom and now prices aren't increasing in real terms. Anything that scares banks into stricter lending could dampen demand even without slight rate rises (bank costs, capital req, inflation)..If sentiment changes in this way I expect anyone not wanting to wait for next cycle will sell and increase supply I'm thinking baby boomer family homes.. I could be dreaming but all the leading indicators are there telling me to wait and watch. I think the old narrative of "the time to buy is now" has been totally true in NZ until about a year or so ago. Timing markets are silly but this just seems like
common sense to be cautious. Wellington always saw a slow but steady uptick but this past four years is unprecedented and clearly directly correlated to low rates and massive DTI. Yes a home is to live in but negative equity sucks mate, believe me! Argh! First world problems.. 

"Yes a home is to live in but negative equity sucks mate"

Exactly. And how long did it take to save the amount of money that was lost and caused the negative equity situation?

Then there is the psychological and physical toll on you and your family.

I know people who own property still valued below what they paid for it, after owning for 10 years. And if you count the interest costs paid over that period, they effectively paid $100 for an asset worth less than $100.

The choice is between:
1) the pain & regret of missing out, if property prices rise
2) the pain & regret of losing your money (and hard earned savings), if property prices don't rise (or fall)

Ask those who have experienced the loss of their deposit (and being in negative equity which choice of the above they would make. There have been a few who have purchased in Auckland in the last 2-3 years. (Remember that being in negative equity means that the person has lost 100% or more of their initial deposit that they laid out to purchase the property)

Then perhaps you can choose which is the more painful option to you and avoid that one.

Take a look at this story of a couple who were mortgage prisoners who were unable to upgrade.

I recall a story of a young couple who bought a one bedroom apartment. Then they had a couple children, and the property was too small for them all. However due to the fall in property prices, they were effectively in negative equity, and were unable to upgrade to a larger property as they had no equity or insufficient equity to upgrade. So they were forced to rent a place that was big enough for them all, whilst still paying the mortgage on the one bedroom apartment in negative equity.

2) follow up
3) follow up -
Also note the mental toll it has taken on the couple.
Note that this documentary was made 9 years after the property prices peaked in 2008 and property prices have still not recovered to their previous peak levels. The couple have owned the property for 11 years and are still in negative equity.

Note, also that single earlier decision to purchase will impact the amount of money that they will have at retirement, compared to if they had not purchased the first apartment and rented instead until property prices were much cheaper.

Here's an investment choice for you:

1) put money in the bank and earn 2-3% per annum? or;
2) buy your own home, invest $61,000 over 11 years and get $16,000 at the end of it? (That’s a loss of 74% of their money. )

Certainly seems like a simple decision doesn't it? How could anyone even think about option 2?

Well that is what happened to this owner who bought using a 90% LVR P&I mortgage. Remember back in 2008, owner occupiers could use 90% LVR.

i) The $61,000 is their initial deposit of $22,900 (10% of purchase price), and the principal payments on their mortgage over that 11 year period.
Ii) The $16,000 is the net sales proceeds of the house after repayment of the mortgage and deduction for selling costs.

Now imagine the impact of that single decision to buy on their future financial security and retirement …

Bought June 2008 at $229,000, sold 11 years later on June 2019 for $190,000 - a loss of 17% over 11 years.
So much for the property prices doubling every 10 years. The property price didn't even keep up with inflation during that period - the property price was NEGATIVE 1.5%per annum, so that is 3.5% below the target inflation rate of the RBNZ).

The above numbers don't even include the additional estimated $125,000 or so paid in bank interest over the 11 year period for the privilege of owning their own home for 11 years.

2006: Purchase price $290,000
2016: Sale price $230,000. A drop of 20% over 10 years.

Add leverage with that - possibly financed the purchase with a 90% LVR mortgage. Owner occupier lost a lot here in percentage terms. Assuming a 10% deposit of $29,000, compare that to the property price fall of $60,000 between the purchase price and sale price - more than 200% of their initial deposit.

A couple of observations:
1) price of property didn't double in 10 years
2) price of property didn't keep up with inflation.

Depends on the property. If its residential and just been zoned commercial skys the limit. If its standard residential probably want to be offering well under gv.

Covid-19 has caused interest rates to drop over the world and it is not going to solve the supply issue in New Zealand (unless it kills us off), so why are you hesitant to buy now? Especially a home and income.

Hi Northman. Look for add-value property. Something that you can make subtle and low-cost improvements that increase cashflow and desirability for the property. Find a keen vendor who Needs to sell

I fully agree. I was starting to think the outlook for NZ property was positive again, but this Coronavirus "black swan" could have much wider ramifications than most are expecting.

Defiantly time to sit on your hands for a bit.

To Brock Landers
Cute but wrong. Give you an uptick for poetry.

From April onwards airline capacity to NZ is being slashed bigtime we may see a lot of air bnb listings as the gold rush is over from tourism which will put pressure in rentals as well.
I have already see a number of listing yesterday that are air bnb houses being sold already as many have got cold feet.

And people will be rushing to buy the BnB's back in a year's time when the virus is gone and forgotten - and the talk has returned to electric vehicles and Winston Peter's latest shenanigans.

But there'll be a shortage of BnB's by then - and their prices will be rising......


Follow your own advice and buy as many as the bank will lend you funds for then

But how many owners will be forced to sell in the meantime? That maybe the time to snap up bargains? Also winter is a terrible time to sell a house, so is can be agood time to buy if you can find someone desperate to sell, rather than just speculating. There are many speculative sellers out there.

Ironically I think this outbreak only makes NZ more attractive as a "lifeboat" a long way from overcrowded countries,
I wouldn't be surprised to see more rich wanting a bolthole here - it's no longer about parking money but self-preservation and that's a heck of a motivator..

We're lucky we've got the foreign owner ban in place. Any foreign investment will be used to expand housing supply.

Too bad about the foreign buyer ban.

Boltholes are fine but what if you can't get here. If NZ closes it's airspace there is no point in having a bolthole. This sounds like a justification for house price increases which doesn't match what is likely to happen. People used to say NZ is safe and then what happened in March last year......

I am not so sure just take a look at our healthcare system which would struggle if this arrives which it may very soon and if it takes a foothold before winter watchout.
If you have serious coin to spend a bolt hole Australia is a better option better healthcare and sunshine hours which equals better health.
Thats why places like Hawaii are well lnown boltholes for the rich.

Should these reports be filed under fiction - unless you have the deposit, affordability of the mortgage is mute.

Well worst vase scenario you could rent out the main house and live in the granny flat if you needed the extra coin...
President of Property

Bid low and you'll get one

Great news about Wellington. Hope the trend continues.

This year is going to be a bad year in NZ. This virus is the wind that finally topples the flimsy house of cards that have been built up by evil spruikers, some of which are STILL trying to get poor victims (FHB) on board in these comments. NZ for some reason thinks it is somehow better and different to the rest of the world. Prices will go up forever and everyone wants to live here, because "we are the best". Arrogance is no excuse. You have had a period of immense greed take over the national psyche. Its time for that to be addressed. The investors who have been making a huge profit off working people for years your judgement has come. If you have become mortgage free on your multiple "assets" you will be ok but your capital gain is about to be wiped off the face of the earth. Rents will not be paid due to illness so if you are an investor with big mortgages your financial situation is about to be destroyed and you know what.... you probably actually deserve it!

Your access to our unique content is free - always has been. But ad revenues are diving so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.