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Home loan affordability improves for 3rd month in a row to December 2004 levels

Home loan affordability improves for 3rd month in a row to December 2004 levels

By Bernard Hickey

Home loan affordability improved for the third consecutive month in September to its best in a year and is now back at levels last seen in December 2004, the Roost Home Loan Affordability report shows.

A slight fall in average bank fixed mortgage rates helped improve affordability for buyers in most parts of New Zealand as house prices remained flat and incomes nudged higher, the monthly report shows.

Affordability is set to improve significantly again in October because of a NZ$29 per week improvement in median after-tax income in the wake of personal income tax cuts.

House prices are flat to falling in what economists describe as a ‘buyers market.’

The Reserve Bank is now expected to leave the Official Cash Rate on hold until March 10 as slower economic growth here and overseas moderates any underlying inflation pressures.

The national median house price was flat at NZ$350,000 in September and is now down 3% from a record high of NZ$360,500 in March. The average two year mortgage rate fell to 6.73% in September from 6.79% in August as the economic growth outlook deteriorated.

The Roost Home Loan Affordability report measures the affordability nationally and regionally for income earners and households, taking into account median house prices, interest rates and incomes.

“Home buyers have the wind at their backs as they head towards summer. Interest rates, house prices and incomes are all moving in their direction,” said Roost spokeswoman Margaret Smith.

“Affordability is back now at levels last seen in late December 2004 before the boom in house prices because of improving incomes and lower interest rates ,” Smith said.

Northland affordability improved substantially because of lower house prices. Whangarei is now among the most affordable cities. It is cheaper than Napier and New Plymouth. 

Queenstown remains the most expensive area in the country, although central Auckland has worsened again as prices rise in its ‘micro-climate’ of leaky homes and foreign buyers. 

Invercargill has taken back the mantle of the most affordable city in the country from Timaru after a substantial drop in median prices in September. Weather may have been a factor. 

Hutt Valley affordability has deteriorated in the last month, as has the Wellington City area, but Kapiti Coast and Porirua improved.

Affordability has been improving since December 2009 as house prices have flattened out and interest rates have fallen, the monthly measure calculated by interest.co.nz in association with Roost  found.

Most home owners are still on fixed mortgages, but more borrowers have chosen to float in the last year, given floating rates at around 6.2% are cheaper than average longer term fixed rates at around 6.7%. However, the gap has closed over recent months, making the fixed vs floating decision more evenly balanced.

The Roost 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 improved to 58.1% in September from 58.5% in August and is at its best level since September 2009.

Home loan affordability was at similar levels as in December 2004.

This figure would have been even better at 56.4% if new tax rates to be applied from October 1 had been used because of a NZ$29 rise in after tax weekly incomes.

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 moved early in 2009 to take advantage of lower interest rates and look for bargains, which improved the number of houses sold and raised prices. 

But house sales volumes have weakened in recent months as tax changes in the May 20 budget and softer economy have affected sentiment and activity. The Christchurch earthquake and South Island storms also dampened activity in September.

Affordability is difficult in the central areas of Auckland, Wellington, Christchurch, Hamilton and Tauranga for those on a single median income, but homebuyers in smaller provincial cities will find home ownership much more affordable. Households with two incomes are also in a stronger position.

Affordability for the typical first-home-buyer improved significantly to 48.8% in September from 49.9% in August to its best level since January 2009 as the first quartile house price fell to NZ$242,500 from NZ$245,875 in August. It is now down from a March peak of NZ$257,500.

Meanwhile, affordability for households with more than one income improved to its best levels since September 2009. 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 38.9% in September from 39.2% in August.

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 benefits. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand in the past.

The survey’s 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 fell to 23.5% from 24.2% in August.  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, while any level closer to 20% is seen as attractive and coinciding with strong demand.

Full regional reports are available below:
- New Zealand (159kb .pdf)
- Northland (159kb .pdf)
    - Whangarei (159kb .pdf)
- Auckland region (159kb .pdf)
    - Auckland Central (159kb .pdf)
    - Auckland North Shore (159kb .pdf)
    - Auckland South(159kb .pdf)
    - Auckland West(159kb .pdf)
- Waikato and Bay of Plenty (159kb .pdf)
    - Hamilton (159kb .pdf)
    - Tauranga (159kb .pdf)
    - Rotorua (159kb .pdf)
- Hawkes Bay and Gisborne (159kb .pdf)
    - Napier (159kb .pdf)
    - Hastings (159kb .pdf)
    - Gisborne (159kb .pdf)
- Taranaki (159kb .pdf)
    - New Plymouth (159kb .pdf)
- Manawatu and Wanganui(159kb .pdf)
    - Palmerston North(159kb .pdf)
    - Wanganui(159kb .pdf)
- Wellington region (159kb .pdf)
    - Wellington City (159kb .pdf)
    - Wellington Hutt Valley(159kb .pdf)
    - Porirua (159kb .pdf)
    - Kapiti Coast (159kb .pdf)
- Nelson and Marlborough (159kb .pdf)
    - Nelson (159kb .pdf)
- Canterbury (156kb .pdf)
    - Christchurch (156kb .pdf)
    - Timaru (156kb .pdf)
- Central Otago Lakes (159kb .pdf)
    - Queenstown (159kb .pdf)
- Otago (159kb .pdf)
    - Dunedin (159kb .pdf)
- Southland (159kb .pdf)
    - Invercargill (159kb .pdf)

The Regional reports for First Home Buyers can be found here.

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56 Comments

From report "The median weekly take-home pay for a typical buyer was $767.01"

How is this calculated? We had StatsticsNZ saying the other day that the median income was $529/week before tax, so about $450 take home. Half of us earn less than that. Does a "typical buyer" now have to be in the upper quartile - top 75%? I can't find any explanation in the report. Anyone?
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It's just more of the same marketing bullshit KiwiDave.....they spin the positive at every turn....

" as house prices remained flat and incomes nudged higher"

House prices remain seriously unaffordable and real incomes are declining. The truth does not read so well.

The best thing Kiwi families can do is reduce debt..get out of debt...teach the kids to regard the banks as parasites...and the govt as friends of the banks.

The current sick economy is a permanent condition. Expect plenty of govt lying about recovery and heaps of cooked up data to support the lying. The skilled can stay and fight over pisspoor pay in this debt strangled economy knowing they are just feeding the banks or the landlords, both of whom have the full support of the govt...or they can emigrate across the Tasman..earn much higher incomes...have themselves a real future.

It's a tough call isn't it!

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Speaking of cooked up data, Simon Bridges was on Breakfast this morning reinforcing the message "prices are not rising", and was pointing to the low inflation 1.1% to back up his claim.  But I don't think this is going to wash for much longer of course, as the average kiwi is finding the cost of living is rising faster than incomes despite what the statistics are saying.   Soon the game will be up.

So in the mean time I expect there will be many people scratching their heads wondering why politicians are telling them that "prices are not rising" when more money is going out the door each week as prices are actually rising, well OK prices for the important stuff like food are rising.  

So what is rising in price? The essentials, such as food, energy, transport, levies and taxes.  And the stuff that is falling (which is dragging the CP index down) is the luxuries such as holidays, flat screen TV's, iPods, computers, mobile phones, furniture, carpet etc and all the other retail stuff that noone is spending money on.  But the way that the CPI is calculated, it doesn't matter if noone is actually buying stuff, because the buying part is irrelevant, its just the costs that is taken into consideration.

Also the CPI has a little thing called "substitution", which is used in the case where something becomes obsolete, such as vinyl records and cassettes, which are replaced by CD's and DVD's etc.  But it can be used for everything else, like say cheese for example, where families cannot afford to buy a 1Kg block, so the statisticians can 'substitute' a much cheaper 500g block instead. 

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Simon Bridges is a total Tory lackey, and a tragic insight into the next generation of politician NZ will have running their lives, and in fact already does. He was on the AKL Super City Select Committee, and he is not even from AKL for crying out loud. I know this is not necessarily essential, however you would think being from Auckland would be preferred. No real need though is there when the outcomes are already decided upfront.

Prices are going up for essentials, most of which are not include in the figures. Inflation at 1.5%, yeah sure it is. Wonder if the spike following the GST increase will recede back. Just who are all these people surviving so well in NZ? Honest question, because I left again to show my dislike of being totally ripped off at every turn. Allegedly I was in the top few % of earners, and not frivolous, so frankly who is affording houses in AKL, because I sure as hell was not parting with my cash at current “affordable prices” NZ as a country is now broke, has been for a long time, and under the status quo, and with the likes of Simon Bridges involved, will always be so. Just as well most people have no idea at all, and do not read these blogs. Enough people on here who do , seem to think NZ inc is doing ok???

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Who is Simon Bridges?

Excellent piece my fellow Matt. you are quite right, the luxuries have dropped in price, negating inflation, but the things that ARE important to our day to day lives are going up 

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The Roost Home Loan Affordability series uses LEEDS data - essentially the huge data set based on the PAYE returns. The income sets we use are the medians for 30-34 year olds for our benchmark series, and 25-29 year olds for our First Home Buyer series. We source this income data from Statistics NZ. We are focussing on wage and salary earners only, and use data related to the month being reported.

Our household income data is from the same data, separately male and female, plus WFF benefits (if any).

The $529 Stats NZ income data you refer to is the June 2010 median for all age groups, whether they are in the workforce or not. It includes income from benefits, retirement income, interest, dividends, etc. We don't use this because it is not related specifically to home-buyers.

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A Typical Buyer is not the same as a median earner.

If you take home $400 per week, you are probably not a typical buyer, or even an atypical buyer. You are probably not a buyer at all.

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Thanks Tim and Dave, I fully understand. My question was rhetorical in a sense.

We could further refine the average income of a "typical buyer". Take it to the point that even if 90% of the population were shut out of the market due to affordability problems, the housing would appear affordable using this highly selective definition of a buyer.

It is completely pointless to say that something is affordable if 75% of folk are struggling to afford it.  I presume these people are living somewhere, either as owners or renters (de-facto buyers)

Fact is that the 50% of us take home less than $450/week, it is irrelevant where that money comes from. They don't all live under bridges

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This Roost report is a load of old crock. Everyone in the business knew the facts months ago.

This mornings Herald winds the story up to another  "shock horror"  tabloid level as if it were  breaking news.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10682022

The real story, lost in the hyperbole, is that rents are rising and will continue to rise until they compete with mortgage payments and even more.

The carping whingers who  have constantly predicted the collapse of the housing market and rubbed their hands in glee for the past twelve months with the thought of it ( including BH) better start a new topic because as predicted by Olly Newland rents will be double in a year or two.

http://www.empowereducation.com/Olly_column_Apr2010.bz

As usual Olly is proving to be right and the whingers wrong. Landlords will be feasting as the queues grow longer.

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The Qs are at the departure gate BD...or are you telling us this economy is returning to the glory bubble days...landlords will increasingly have to fight for tenants. Bollard's QE covered bond rort is a tell tale of the depths of the crisis and the worst is yet to come. My money is on OllyN having offloaded his stock of rentals over the last 2 years while telling you lot how great things are!...suck on that.

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No, Wally. The landlords are going to get higher rents from the workers in our film industry. People think unemployment here is bad now. Just wait.

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Big Daddy

"Landlords will be feasting as the queues grow longer."

Really?

Rents are rising in some parts of the market and falling in others.

We get the raw data from the Department of Building and Housing every month, which we use to update this chart series below

http://www.interest.co.nz/charts/real-estate/rents-median

It shows the median weekly rent for New Zealand unchanged at NZ$300 since February 2008. It remained at NZ$300 at the end of September.

What we're seeing is low to no rent growth in provincial towns and cities and for larger houses in the big cities. This is being offset by rental growth in Auckland and in some smaller apartment types.

But overall flat. Meanwhile inflation does its thing... 

cheers

Bernard

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Bernard, claiming rents are unchanged for over 3 years is a childish, and anyone with a basic market knowledge and common sense knows it is impossible in this environment 

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If you had spent 5 minutes investigating this link and data would found out:

  1. It does not take into account increase of existing rents, so if you live in same property for 10 years and your rent increases 500%, bond stays unchanged, and shows 0% increase
  2. Bonds are not compulsory,  I can’t imagine anyone putting their money in someone’s else account
  3. Bonds can be lower than actual rent

Iam guessing data applies only to HNZ stock

And you call this most comprehensive data? You either have very limited subject knowledge or are getting desperate 

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Alen

You raise some interesting questions about the DBH statistics. We'll do some more digging, suffice to say though that they are not just for state houses.

Let's have a look at another broad measure. Statistics NZ's latest CPI figures show actual rents are up 1.7% in September quarter from the same quarter a year ago, about in line with inflation overall.

Inflation in rents over the last two years has totalled 2.8%.

http://stats.govt.nz/browse_for_stats/economic_indicators/CPI_inflation…

Rents are unlikely to rise faster than incomes and the experience of the last two years is that they have risen less than incomes.

Landlords expecting their yields to increase back to something economically viable (without the previous tax breaks or capital gains) through an increase in rents are wasting their time. The only likely way the yields will get back to 'normal' is through falling prices or a long period of time. Or both

 

cheers

Bernard

 

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Here's the great stabiliser in personal rental payments. You pay what you want to. If you have $500 p.w. to allocate to rent, you do. If the landlord tries to put up the rent, you move; find another $500 place. Sure, that may be a $450 property that's just gone to $500, but that is financially immaterial to the renter.Ultimaltey the 'too expensive' properties remain empty; drop their rents to compete in the market and rents head back down again. On average the total $ 'rents paid' pool remains pretty constant ,unless wages rise.  Unlike an owner, who if interest rates rise, cannot 'just move'. They have no choice but to pay any mortgage interest rise, or sell; and pay the selling costs as an added bonus!

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According to Statistics NZ last year houshold survey, median weekly rent increased  9.5% nationwide. That is 2008-2009 year, during economic downturn and rising unemployment. One would expect at least same increase now economy slowly improving. However survey is conducted every 3 years, and next one is due 2012.

http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/HouseholdEconomicSurvey_MRYeJun09.aspx 

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These surveys ( believe them or not!) just point out the obvious. They are like reporrting the figures on "Sales". The prices are lower ( things are more affordable ,for those who can pay) but the seller has to take a lower price to actually move the goods! Who is the winner there? The buyers that there are, or the sellers? Here's the thing. If the sales don't move the goods, the seller either drops the price further, or goes broke, or both!

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"central Auckland has worsened again as prices rise in its ‘micro-climate’ of leaky homes and foreign buyers"

OOhh some new scapegoats, last year it was because of evil property investors, but foreigners and leaky homes are awesome scapegoats too - very emotionally loaded.

One thing Auckland City does have a micro climate of is low density town planning rules - Auckland prices could be dramatically reduced if the District Plan was accepted Auckland was a city, not a small provincial village where everyone is a nuclear family with 2 cars and needs a freestanding house on 500sqm. 

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Correct to an extent - the new places that get built (e.g. terraced houses on 200 sqm) would be cheap - but if you wanted to buy a free standing house on 500sqm it would probably be even more expensive as there would be less of them...

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So Bernard, now that affordability is back to 2004 levels, do you still think house prices are going to drop 15% from peak (which is about another 10%)? 

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JimboJones

Good question. I reckon 'normality' is something under 50%, which is back to early 2003 levels. That requires one or a couple of factors. Either incomes have to rise significantly, interest rates have to fall significantly or house prices need to fall significantly. My bet is on the latter.

cheers

Bernard
 

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London to a Gummy Bear that you're wrong , Bernard . Two factors you overlook are time , and inflation . My bet is that nominal house prices remain static for several years . Meanwhile the compounding factor of inflation, over time , brings houses back to the affordability level you cite . Additionally , wages will gradually rise a notch or two , as the years drift by .

Game for a wager , big guy ?

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"Is housing the most dangerous asset in the world? ... house prices were virtually unchanged in real terms between 1890 and the later 1990s, before almost doubling in the ten years between 1997 and 2006."

http://www.economist.com/blogs/freeexchange/2010/10/global_house_prices

The preceding article ( I know! Not another article...) has NZ still overvalue by "just" 20%, whereas Aussie is....63% !

http://www.economist.com/node/17311841?story_id=17311841

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 "Is housing the most dangerous asset in the world?"

To be fair NA...investing in a piggery in Afghanistan might be worse...just! 

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Long maturity US Treasurys don't have a stellar performance , either . And the current crop are looking decidedly over-bought ( under-yielding ) .

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auckland city 

 The median house price was $536,200 in September, up from $515,300 last month. The median house price was $517,600 in September 2009 which puts annual growth at 3.6%. Five years ago the median was $459,000.

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The figures are getting better by the day !

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The figure are getting...worse...SK! That's why 'affordability" is a 'better' figure. If something on "Sale"  ( more affordable) in the stores, is that a better price for the buyer or the seller? SUre; you may not be a seller, but many are. And their 'sale' prices will infect your asset prices. If an IPod at Harvey Normans goes on sale at $500, do you think Noel Leeming will sell many at $750? And neither can 'put the price up' ( as with property) because their customers are all borrowed up to their eye-balls! I know....let's all go on strike for more wages......Now there's the road to ruin for what's left of this country.

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Worse for you perhaps - dont know your situation.

I didnt see much infecting of Grey Lynn villa values at the Barfoot auction yesterday.

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I'm neither a buyer or a seller, SK. It's, frankly, immaterial to me. I have alternative plans. But re Grey Lynn. Why was the seller, selling? Because they thought the price would be higher sometime soon? I doubt it. And why was the buyer buying? Because they'd just sold their $5m property in Remuera? Who knows. All I do know is the numbers dont' stack up to buy~now, in anyway shape or form. And when that happens, they will correct. You may see massive wage rises coming to supplement the additional debt load, and capital gains rises. I don't. I see 500,000 people in the UK losing their jobs, and in a global world, that will affect us. Unemployment is coming to us ,here, hard. Just ask one of our film technicians, to start with...

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yes it will effect us - probably more English immigrants 

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Exactly. I know you probably think "more houses needed" but it will mean more job displacement for our workers, more unemployment ( our existing, plus them) , more house selling ,to pay the bills- housing dwelling density will increase.

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I doubt the job losses in the UK will lead to a flood of immigrants here.

Most of the people losing their jobs in the UK will be bureaucrats. Bureaucracy is no longer  a growth industry here, like it was in the peak of Helen's reign. At one stage a couple of years ago most of the Council planning staff I had to deal with were recent pom immigrants, because they couldn't fill planning roles locally. With the super city re-jig I doubt there will be enough planning roles to go around the locals let alone supporting the immigration of  a whole lot of unemployed English bureaucrats

There are not the jobs in bureaucracy here any more to support an influx of Pommie bureaucrats losing their jobs.  

there won't be the jobs here for them, and factor in the weak pound, I  just can't see an influx of English immigrants on the back of the problems over there

Aus is probably a more likely bet for them, or they just need to bunker down

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Median multiples MATTER.

It is all very well to say that "affordability" is comparable with "x" years ago; but how much "room to move" has the Reserve Bank got now compared to then?

The economy will only be back to soundness when median multiples are back to sensible levels. "3" is the magic number.

And we desperately need to put a stop to "property" being the economy's cancer, growing even while the economy's productive organs are dying. Even the recent OECD Housing Markets report put the finger on this, pointing out that coherent monetary policy became virtually impossible in these circumstances. Echoes of what I had been saying for years already - a base interest rate that would "spike" a property bubble as they have occurred lately, would kill the entire "rest of the economy" in the process - like an overdose of chemotherapy.

We desperately need policy tools other than chemotherapy, for these property bubbles.

The fact that median multiples might have moved from 3 to 6, conceals the fact that the REAL "inflation" that has occurred is not 100%, it is 1000% PLUS - the prices of the SECTIONS that the homes are sitting on.

The problem is councils strangling supply, delaying, and imposing unprecendented costs on development. Our economy will not recover permanently until a breakthrough is made on this.

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So if the average NZ income is say $45k, you think the average house price should be $135k?  Yet to build a new house costs $200k minimum excluding the land!

A couple on 2 incomes that can live off one income and put the rest into a mortgage could buy an average house in 5 years or so. And a couple that both earn 100k a year (not that uncommon) could buy an average house in a year. Are you saying that would line up with how things used to be 20 years ago?

I think your dreaming that house prices will ever get anywhere near 3 times average income even if the councils removed all land constraints!!

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So what's your answer, Jimbo? Do we keep borrowing to pay for what we can't already afford ( that's why we have continuous and rising foreign borrowing commitments) and then when we are final and utterly broke, sell the whole lot off to, whoever? Where do you see this lot going adn where do you see New Zealanders living?

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I haven't got an answer, I just know that someone must be able to afford the current house prices, otherwise they would be lower as the price is set by the market. 

I think the premise that everyone on an average wage should be able to afford to own a home is gradually being eroded by the fact that the rich are getting much much richer and are buying up assets.  What might seem unaffordable to someone on an average income might be easily affordable to someone on a good income.

In Auckland, unless you are on a good income, you will have to rent or buy an appartment or live in a less desirable area - this lines up with most of the bigger cities in the world.  Anyone who thinks Auckland's population can grow yet a free standing house on a big section in central or north shore will remain affordable to someone on an average income is fooling themselves...

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It only takes more people to say 'No" to make pricers fall, Jimbo. I could buy my place this afternoon if I chose. But I decide not too as it's $450 per week less to rent the sucker that own it! My landlord has asked my twice since January if I want to buy it, the second at a lower price. That ,to me, is the answer. It's all about the sums and unemotional financial descisions.

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Medians are not averages, and "the median multiple" is based on median household income, not median single income.

It would look even worse if we compared historical records, because 40 years ago, a "household income" WAS a single income.

Yes, land supply issues are responsible for most of the price inflation. "Land" has ballooned hundreds of percent in price.

There have been some dis-economies in the construction industry.

Of course maximising the use of artificially scarce land leads to NO deliberately "budget" homes being built. Are any of the budget home builders of 20 years ago still even around?

Development contributions are partly responsible for pushing prices up too. They are actually an inequitable wealth transfer anyway. Metro area growth leads to increases in the value of established area properties. Property taxes or rates fairly reflect this reality. Development contributions just result in the owners of established area property making their capital gains without any offsetting contribution.

In less inflexibly planned metros, where land uses are more mixed, this effect is much more muted, which is why some metros in the USA can double their population in 30 years yet median multiples stay resolutely below 3.

I have just discovered that academic research that shows that mixed uses of land, less arbitrary zoning, leads to shorter vehicle miles travelled; has been deliberately suppressed by the dominant policy makers in the USA at the current time; and in many States. NZ of course is following the fraudsters, not the honest analysts.

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......... Meanwhiles , down at the NZX , and over at the ASX , me Gummy shares are rising , and me dividends keep on rolling in ........... As I sits on the beach , I wonders to meself , this lot are still flapping on aboot houses , and nought about productive assets ....... Funny thing that ...............  Cherry hon , more Tanduay Rhum , salamat po .

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Can't be true Gummy Bear ,my great great grandfather lost his bundle in the sharemarket in 1987 which is all the proof you need that it's a rort run by crooks for crooks. Plus our good friends BH and Neville B both warn of soon coming asset deflation so enjoy your mirage of capital gains and dividends because it won't last. Have a last drink on the beach while you can still afford it as you'll be queuing for bread in a few months !.     

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Big call there middleman.  The 87 crash was a doozy - it happened fast and people took notice.  However the greatest portfolio loss for kiwis was during the "real value" decline of property during the inflationary period of the late 1970's.  And its happening now as property declines more than people realise, with values dropping or just sitting there like old pudding as the tide of inflation marches on while property investors all desperately keep chugging the cool-aid and telling each other they are still doing the right thing and cannot be wrong.
 

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" Helicopter Ben " and the $$$$$ printing men will ensure deflation don't cripple the nation .

Their notion is that the potion is enuff Yankee $$$$$ to fill an ocean

Inflation is our station .......... Just a matter of when !

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Ah, strictly tongue in cheek Sam.

Agree with you that the quiet march of inflation is eroding property values , lightly just now but if the predicted 5%+ eventuates next year and demand for property remains suppressed , then we could see some serious negative movement. But there are so many variables it is impossible to say with any confidence. Lots of certainty in predictions from contributors to this site but underpinned by an almost religious fervour and  desperate hope as often as well thought through positions.   

Disagree that 87 happened fast. It'd been obvious for many months before that the world had gone crazy. The deluded, greedy and ignorant were suckered by the fast boys : the smart money had left long before. Equity investing today is light years removed from then and yet most of NZ quite erroneously believes it's still the same wild west and weirdly prefer to speculate on a wilder west illiquid housing market. And yet we snivel when corporates cannot raise capital because Kiwis are all invested in houses and overseas investors grab our companies. 

So - the penny is dropping that housing is not , after all an investment ( unless you are a developer or career landlord), we hate equities so are taking the easy safe route of paying down debt (or at least have stopped borrowing - the paydown period is next ) - what after that?. A survey tonight suggests we don't mind the big bad banks after all,  so fixed interest is becoming cool again. Low net returns from there will take the gloss off as investement returns lag inflation. So we'll begin chasing yield again as the painful memories of the GFC start to recede. Interesting to see the recent pick up of interest in real estate trusts and higher yielding NZ blue chip equities. Good times if you are in the market, very uncertain times if you have high residential investement exposure. 

 

               

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"Affordability is set to improve significantly again in October because of a NZ$29 per week improvement in median after-tax income in the wake of personal income tax cuts."

Doesn't that illustrate that your home loan affordability measure misses the obvious increase in other demands on after tax income - increased GST, ETS charges, local body charges, etc?

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Not to mention the ever-increasing cost of everyday living, as detailed in this article:

http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10681929 

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And it looks like the consumers of NZ agree:

 

http://www.stuff.co.nz/business/4259518/Consumer-confidence-weak 

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As I've said everytime these reports are released short term affordability is largely irrelevant. 

If you buy a house you can just afford at 4 times your average income and a high interest rate your debt is fixed and things cant get much worse, as soon as you start paying it off the interest drops rapidly.

If you buy a house you can just afford at 7+ times your average income at emergency low interest rates you can be assured before you've paid much off your 30 year loan interest rates will return to normal and youll be screwed.

(disposable) Incomes and house prices are the only relevant factors.  If you can only afford a house because of low interest rates you can't afford it.

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It doesn't matter how much the multiple is, Bullitt,  4x, 7x, 10x, because the Capital Gain will have put you out of harms way in a year or two. ( NB: To be read with good dolop of sarcasm).

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Bernard, how "Buyers Market" improves affordability? What does it mean, and how you neasure level of "Buyers Market"? Nothing about it in report. Someone would think it means house prices dropped, but are flat for over a year and much much higher than in 2004. Must be some confusion in your head again.

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Super city, super prices! WTF would anyone want to live in Auckland? Ive seen REAL cities in my travels. Cities that are vibrant, full of diversity, culture and intellect. Auckland has but a hairs breath of all of that.  Jesus people go see it for yourselves! Get a life and leave this zit of a country run by socialist ego maniacs. So many (not all) NZder's are so stuck on 'house, boat, bach, & rental' mode (let's not forget 'welfare' mode also) that it's no wonder we have a global reputation for being "dull". 

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This is latest about property rental market:

“The Auckland rental market continues to tighten which is not great news for tenants but potentially good news for landlords as they look to renew long-term leases over the upcoming Christmas period."

Supply down 12%, average rent up 5%, in Auckland 11%!

http://www.trademe.co.nz/community/announcements/post/932/rental-market-sees-supply-down-and-rent-up 

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It's a shame Auckland costs so much for a roof over your head, renting or purchasing, it would be a great city if more money was spent else where.

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According to all relevant sources rents have gone up by almost 20% over last 2 years!

This from BDH:

In summary “ Market rents are growing across most regions and dwelling types”…” the growth in rents continues, stronger in Auckland than for New Zealand” http://www.dbh.govt.nz/market-rent-analysis

This from Statistics NZ last year:

"For those making rent payments, median (half pay more, half pay less) weekly rent payments increased from $220 in 2007/08 to $241 in 2008/09 (up 9.5 percent). Meanwhile, median weekly mortgage payments, for those making these payments, decreased from $328 in 2007/08 to $312 in 2008/09 (down 4.8 percent), partly reflecting a decrease in mortgage interest rates charged over the survey period. "

And from Trade Me yesterday:

Supply down, rents up

http://www.trademe.co.nz/community/announcements/post/932/rental-market-sees-supply-down-and-rent-up 

Even Bernard the Spinner can't turn this around.

 

 

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trademe homes for rent nationally---12444--of these 4956 [40%] have been advertised for 1 month or longer--listing date is at bottom of promo photo--Auckland figures are 3779 for rent-1139 [30%]  1 month or longer--better because of deeper population base i guess---even still there will be lots of landlords stressing ---there will be additional listings with other mediums so the picture isn,t as rosy as some would like to portray

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