Roost Mortgage Brokers Home Loan Affordability report shows improvement in December for most regions as prices dip; 1st home buyers keen

Roost Mortgage Brokers Home Loan Affordability report shows improvement in December for most regions as prices dip; 1st home buyers keen

By Bernard Hickey

Home loan affordability improved in December after median house prices dipped nationwide, helping to lift demand from first home buyers who see record low interest rates staying lower for longer and who can now use their KiwiSaver money as a deposit.

Affordability for young couples who both have jobs is near its best levels in seven years because of record low interest rates and rising incomes, although affordability for home buyers in central Auckland, Wellington and Christchurch remains difficult.

“There has been a surge of interest from first home buyers in recent months because of the low interest rate outlook and because many are now able to start withdrawing their KiwiSaver money,” said Rhonda Maxwell, spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.

See all the regional reports for regular home loan affordability here.

After three years in the scheme KiwiSavers who want to buy a first home can withdraw contributions made by themselves and their employers for a deposit. They cannot withdraw the government’s kick-start or tax credits contributed by the government.

Many first home buyers reached their 3 year anniversary in late 2011 and banks are competing hard for these home buyers, often lending up to 95% of the value of the home and waiving loan fees to win business from rivals.

See all the regional reports for first home buyer affordability here.

“Mortgage brokers and advisers are in the best position to get the best deal from any banks and either to advise borrowers directly on using their KiwiSaver contributions, or refer them to an authorized financial adviser,” said Maxwell.

Comments from the Reserve Bank over the last month and the darkening outlook for the global economy have further flattened the interest rate outlook. Most economists now see the Official Cash Rate on hold here until late this year or early next year. Some banks even trimmed their fixed mortgage rates in early January as wholesale interest rates fell, making the fixed vs floating decision even tougher for borrowers.

Affordability improved nationally, with prices lower in central and South Auckland, and in central Christchurch. The median house price fell to NZ$355,000, which reduced the proportion of after tax income needed to service an 80% mortgage on a median house to 52.0% in December from 53.8% in November, the Roost Home Loan Affordability report shows.

Best in 7 years

Household affordability for first home buyers improved to 21.5% of income from 22.1% the previous month and is around its best levels since late 2004. First home buyer household affordability is measured by calculating the proportion of after tax pay from two young median income earners required to service an 80% home loan on a first quartile priced house. Affordability worsened somewhat in North Shore, West Auckland, Hamilton and Tauranga, where prices rose. See the main report for links to regional reports.

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

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again. More than 60% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 5.8%.

The Home Loan Affordability reports use the floating rate. Affordability for households with more than one income improved in December because of the fall in median house prices. 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 34.0% from 35.2% in November. 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 first home buyer household 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)

Regional home loan affordability comparison:      
mortgage payment as a % of weekly take-home pay      
 
Dec-11
Nov-11
Dec-10
Dec-09
Dec-08
Dec-07
New Zealand
52.0%
53.8%
55.5%
65.2%
60.0%
81.3%
Northland
46.5%
49.1%
51.5%
61.7%
62.5%
85.7%
- Whangarei
39.3%
41.6%
45.0%
52.6%
50.7%
71.5%
Auckland
67.1%
67.9%
67.9%
80.6%
75.7%
101.3%
- Central
74.5%
77.3%
76.3%
89.2%
77.7%
104.3%
- North Shore
73.1%
72.6%
75.3%
83.7%
76.6%
102.9%
- South
65.9%
67.8%
70.3%
82.2%
77.3%
100.7%
- West
58.7%
58.2%
55.2%
72.1%
68.2%
85.0%
Waikato/BOP
47.5%
48.3%
53.0%
62.2%
58.7%
82.2%
- Hamilton
52.8%
51.2%
55.2%
68.3%
60.7%
82.2%
- Tauranga
51.0%
59.6%
66.3%
68.0%
71.2%
91.1%
- Rotorua
38.1%
36.5%
37.3%
42.1%
44.6%
62.4%
Hawkes Bay
45.0%
47.8%
51.0%
59.5%
53.8%
72.0%
- Napier
48.8%
47.8%
56.1%
64.1%
58.9%
79.6%
- Hastings
46.2%
47.2%
51.9%
62.9%
52.7%
72.7%
- Gisborne
40.8%
44.5%
43.7%
57.0%
53.7%
72.7%
Manawatu/Wanganui
34.6%
36.1%
37.3%
45.4%
44.1%
62.9%
- Palmerston North
40.1%
39.9%
41.1%
48.8%
46.1%
63.2%
- Wanganui
29.0%
33.4%
32.3%
44.3%
34.2%
53.5%
Taranaki
44.7%
42.7%
45.4%
55.2%
51.4%
67.0%
- New Plymouth
47.1%
47.0%
56.0%
67.2%
56.0%
75.3%
Wellington region
52.4%
51.9%
58.3%
67.0%
62.6%
81.0%
- City
58.5%
58.6%
64.6%
72.1%
66.6%
88.3%
- Hutt Valley
49.3%
46.2%
52.0%
59.0%
57.3%
70.1%
- Porirua
51.4%
58.5%
63.0%
65.4%
67.5%
80.2%
- Kapiti Coast
52.5%
51.0%
57.2%
63.0%
59.4%
80.4%
Nelson/Marlborough
53.2%
52.9%
56.7%
68.6%
60.2%
87.4%
- Nelson
50.5%
53.1%
57.2%
70.9%
54.0%
81.0%
Canterbury/Westland
49.3%
50.8%
50.0%
60.1%
56.3%
77.2%
- Christchurch
54.5%
57.8%
58.7%
66.7%
61.2%
83.0%
- Timaru
41.9%
37.7%
39.0%
45.3%
40.1%
61.6%
Central Otago Lakes
69.1%
64.4%
68.7%
85.6%
84.1%
106.9%
- Queenstown
89.8%
71.1%
73.7%
95.2%
88.1%
137.1%
Otago
38.9%
38.9%
40.4%
45.5%
45.2%
63.8%
- Dunedin
43.5%
43.6%
46.1%
51.6%
51.5%
69.6%
Southland
30.5%
30.6%
31.0%
35.7%
32.8%
49.4%
- Invercargill
32.5%
32.5%
31.9%
38.6%
31.5%
53.0%

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?

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24 Comments

Comment Filter

Highlight new comments in the last hr(s).

"The trend of more renters in Auckland is to continue into the middle of the century, with an Auckland Council analysis tipping three out of 10 households will not afford a $400,000 house by 2051".herald
Great news for the landlords and the banks because the fathead govts regardless of smell will carry on with the landlord subsidy and the banks will strive to puff up the property bubble fully supported by the stupid in the RBNZ.
Oh and on current trends they will need $4,000,000.oo to buy a shitbox by 2051...right John?

The above rubbish that suggests affordability has improved, fails to note that interest rates will not stay low forever, unless the recession lasts forever!....it also sets out to mislead people who are too thick to know what a mortgage is and too dumb to understand the property prices are being kept high by the Banks fully supported by the RBNZ which let's be honest...does not give a bloody dam about the average Kiwi family.

Wolly,
But what if we're headed into a Japanese style recession?
Check out the charts at the bottom of this page.
http://www.interest.co.nz/charts/interest-rates/ocr
Japan's OCR has been at 0% since the mid 1990s...
cheers
Bernard

What if:
- Dig up remote places of south Island
- Do some serious drilling in Southern Basin, Taranaki and Wairoa Coast
- Be part of Australia
- Another province of the mother land
endless possibilities

Don't join the race - New Zealand.
 
Chairman Moa- more megalomaniac economic foreign operations, our authorities cannot handle financially, technologically and operationally.
 
http://www.parliament.nz/en-NZ/PB/Business/QOA/b/2/6/49HansQ_20110413_00...
 
 
 
 
It time for small beautiful New Zealand to think economics and come up with a long term vision for the country.
Today - where the world is moving into more and more pollution in many sectors of industries, remote New Zealand has a great opportunity to make a difference and be the role model for the world. A 100%pureNZ – clean and green strategy would generate billions in return.
 
http://www.scientificamerican.com/article.cfm?id=10-worst-toxic-pollutio...
 

Sorry I don't buy that 100%Pure NZ slogan.  Our environment is one of the dirtiest - look at our rivers, our beaches, our smoke belching diesel cars, our bad habbit of littering.... 
Long term vision: we can keep NZ green and eat grass or start mining cleanly and live (yes, there is such a thing). 
What fuuny is that in NZ we aren't even allowed to discuss the topic!

100% pure BS....can you buy that?

One shining example of clean green enrgey is the Kaipara Habour Engergy Project..  it got scaled down by some greenies objection.  They said that dolphins are going to get chopped up by the very sloooow moving blades.  We, the human don't think very highly of dolphin's intelligence!
oh and that NIMBY mentality...
Clean green energy... my axxe

 enrgey....... Engergy.....fat finger CM?

Dyslexic finger... you should try to type English on a Chinese keyboard  }o)

Chairman Moa – I recommend you spend ½ hour of your time and do research how much costs occur daily to clean up pollution – billions.
Look out rather for PDF files - not media propaganda.
 
…and do another research how much costs are involved to clean up industrial accidents/ catastrophes.
 
Here in New Zealand we have to stop the race to the bottom - in copying other nations economic ambitions - it fails.
 We must be different.  

Why do you greenies always assume mining = clean up?  And conveniently ignore some shining example of clean extraction...Have you heard of Norway?
 

Chairman Moa – don’t ride the political wave.
Economics in modern day need to be questioned. Too many economic activities are based on quick money – but don’t consider long term massive costs, caused by pollution and other environmental impacts.
 
Last time we talked about the issue - I have given you several links, which explained why the two countries cannot be compared.

Don't always believe what you see on TV or read on the internet - Haven't your mum told you that?

Chairman Moa - your answer suggest - I could be at least your granddad.
 
What a great debate ???? !!!!

Oh crxp, possibility that I might be genetically defected!
{.o)

 Yeah - Some kind of - "Brain polluted" eating too much mackerel from around Japan  ;-)

last I heard the tide scheme in the cook straight was doing a trial to ascertian this, ie there is/was such a claim but no proof it would be the case....I would think a court would want proof and not a blind guess, I know I would.
Clean, green energy, well the point is pretty soon renewables is all we will have mostly of....so we have to move to them...Nimbies will have the choice of a working light bulb via a tide generator or darkness....they will be out voted...
regards

We can dam the the coast line around the remote Makara coast line and let the tidal do the work (they've done in France)... but noooooooo NIMBY

Surely the right question to ask, is why the NZ property market is dependent on the banks creating an endless stream of new credit...
and the % of income needed to finance personal debt.
and the ongoing debasement allowed by the RBNZ
and the tendency for the 1% to grow the fatter income gains while the 99% get stuff all...
My point is...to argue that property has become more affordable due to lower finance costs, is seriously misleading. Dangerously so!
 
 

Haaaaaarrrrrrrrrrrrhahahaaaaahaaaaaaaa
"Earthquake repair work and Auckland house building could boost New Zealand's $8.9 billion building sector and turn the downturn into a new growth phase.
A report out today from consultants BIS Shrapnel's forecast activity through to 2017, calculating how rebuilding efforts would cause a big change.
Adeline Wong, senior project manager, predicted activity levels would rise 50 per cent in the year to March, 2013, mainly due to Christchurch and Auckland house-building activity."
Herald. (funnies section)

Want to offer my experience of late. About a week ago posters on this site encouraged shopping around for a better mortgage. Did so and secured  0.4% floating rate below advertised rates.
Thanks for the heads up!  

Oh goody an appropriate thread!
"The community housing sector says it is "bursting at the seams" to contain a growing homelessness problem, which it says has gone unrecognised by the government. It has been calling for a national inquiry into homelessness since 2008.
Housing New Zealand is to shut its offices to clients and only talk to them through a national call centre, a move attacked by voluntary organisations as an abdication of its responsibilities to society's most vulnerable people."
http://www.stuff.co.nz/sunday-star-times/latest-edition/6481161/Housing-NZ-shutting-offices
That'll solve the problem...can't see the peasants=no problemo
Brilliant bit of policy...bonus for the dept head..fatter salary....harrrrrrrrrrrrrrrhaaahaaaaaa
Ooops...t"he peasants are storming through the HNZ front doors....quick call the fuzz...whadda ya mean they're busy...."

Let's cut to the chase shall we....the homelessness situation is the result of govt allowing the parasites to own the property market through the UNCONTROLLED creation of credit and the farce of the mortgage laws that protect the parasites.
End result of feeding cheap endless credit to peasants in a country with a sick media and useless govt.....property bubble.....unintended outcome= increased homelessness....
All the idiocy made worse by a brainless benefit called a rent supplement which is no more than a landlord subsidy..a blatant encouragement to landlords, to borrow and buy more rentals, to collect the suibsidy and chase more rentals......yes you guessed it the prices of cheaper properties exploded higher....Try getting that message through the thick skull of Bill English...fat chance...and iffin you manage it...your message gets lost in the wool stuffed in the space.