Housing affordability at record levels in Christchurch, improving in Auckland, latest interest.co.nz Home Loan Affordability Reports show

Housing affordability at record levels in Christchurch, improving in Auckland, latest interest.co.nz Home Loan Affordability Reports show
Photo: Santeri Viinamäki

By Greg Ninness

Housing is becoming more affordable in Auckland with large parts of the region now considered affordable for typical first home buyers, according to interest.co.nz's latest Home Loan Affordability Reports.

Auckland South, which includes all of the suburbs previously contained within the boundaries of the former Manukau City Council, has joined Papakura and Franklin as being classed as affordable for typical first home buyers.

That means that the mortgage payments on a lower quartile-priced home in those areas would be less than 40% of the take home pay of typical first home buying couples (defined as couples where both are aged 25-29 and working full time, earning the median wage for couples of their age in Auckland).

The main driver has been a decline in the Real Estate Institute of New Zealand's lower quartile selling price in Auckland South. This has declined from $666,500 in February to $620,000 in June.

That, combined with a modest fall in the average two year fixed mortgage interest rate, which has declined from 4.72% to 4.65% over the same period, has seen the amount that would need to be set aside each week to meet the mortgage payments on a lower quartile-priced home in Auckland South drop by just over $61 a week, from $709.03 a week in February to $647.92 in June.

Over the same period, interest.co.nz estimates the combined take home pay for a typical first home buying couple would have increased from $1620.36 to $1631.18 a week.

That means mortgage payments on a lower quartile-priced home in Auckland South dropped from 43.8% of take home pay in February (above the 40% affordability threshold) to 39.7% in June (just under the 40% affordability threshold).

In Papakura the mortgage payments on a lower quartile-priced home would take up 36.5% of a typical first home buyers' take home pay, and in Franklin it would be 36.8%.

Separate 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

North Shore still the least affordable place in NZ for first home buyers

However while the southern districts of Auckland are now considered affordable for typical first home buyers, the higher prices prevalent in the rest of the region are likely to keep a home of their own beyond the reach of many first home buyers unless they are on higher than average incomes.

The North Shore remains the least affordable place in the country for first home buyers, with a lower quartile price of $795,000 in June, which means the mortgage payments would be likely to eat up 52.5% of typical first home buyers' take home pay.

In Rodney it would be 48.8%, in west Auckland it would be 44.1% and in central Auckland it would be 41.2%.

Outside Auckland, the only place considered unaffordable for typical first home buyers is Queenstown, where June's lower quartile price of $690,000 made it the third most unaffordable place for first home buyers in the country, after the North Shore and Rodney in Auckland.

Although many other parts of the country have shown significant increases in lower quartile prices over the last few years, they still remain within affordable limits for typical first home buyers.

For example the mortgage payments on a lower quartile-priced home in Tauranga would take up 34.8% of a typical first home buying couple's take home pay. In Wellington City it would be 31.3%, both well below the 40% threshold.

Housing most affordable for first home buyers in Christchurch for at least 14 years

However first home buyers who want to live in one of the major centres should probably consider Christchurch as an option.

Housing is now more affordable for typical first home buyers in Christchurch than it has been at any time since Interest.co.nz began compiling the Home Loan Affordability reports in January 2004.

The REINZ's lower quartile selling price for Christchurch dropped to $345,000 in June, the lowest it has been since July 2016.

The mortgage payments on a home purchased at $345,000 would take up just 20.2% of the take home pay of typical first home buyers in the city, a record low since the Home Loan Affordability Reports have been published.

Whanganui versus Invercargill

It's a toss-up between Whanganui and Invercargill as the most affordable urban centres for first home buyers, with lower quartile prices of $167,000 and $169,000 respectively, which means typical first home buyers in both cities would probably only need to to set aside about 11% of their net pay each week to service the mortgage on a lower quartile-priced home.

The individual affordability reports for all 41 of the locations monitored are available by clicking on the appropriate links in the box to the left.

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30 mins and no comments yet!? Wow


another typically uninsightful contribution from Houseworks. Agreed that housing is slowly becoming more affordable but, still it remains severely unaffordable by historic measures. Considering first time buyers have much lower interest rates, 30-year mortgages and evidence of interest only lending that banks use to get them across the line. There's a long way to go to close the wealth gap. Kiwibuild is intended to help address this. Auckland house prices are slipping at a time of increased global risk. Excellent opportunity for first time buyers to wait, save and watch what unfolds.

@Retired-Poppy Interest only periods make it harder to get across the line as the repayment period is calculated across a shorter time frame which makes the proposed payments higher.

See the Aussie royal commission, interest only periods are used by lenders as a form of affordability make believe. The use of interest only periods makes it easier for borrowers to get loans, as lenders can look at affordabilbilty in the here and now and, hey, house prices always go up, so the borrower can always just refi or sell, right? They are our equivalent of teaser rates, they perform the same function. Last time I looked interest only was about 40% of new borrowing, maybe that number is a bit stale. A big part of that is owner occupier lending. How much of that lending would have been made on usual P&I terms? Much less, I bet. So your suggestion that interest only periods are an impediment to owner occupier borrowing is I think just plain wrong. Interest only periods are a marketing tool used by banks to make the unaffordable seem affordable.

In NZ a bank servicing calculation is based on whats called a 'repayment period', this is the period where both interest and principal payments are made. An interest only period reduces the repayment period. For example a 30 year loan term with a 5 year interest only period has a 25 year repayment peroid.
In NZ bank serving requirements rise as interest only periods extend. It is harder to clear credit with an interest only term in an application. Further it is unusual (not impossible) for interest only terms to be applied to owner occupied dwellings.
Your banker may make a mistake but thats the correct procedure in this country for bank servicing calculations.

in New Zealand and Auatralia, our banks generally offer interest free loans for the first 5 years of a 30 year term. The first 5 years of interest only, is calculated as "DEFERRED PRINCIPLE", of which needs to be re-calculated at the end of five years and then the unpaid or (deferred priciple) is added onto the remaining 25 years of the term amd recalculated to ensure that the debtor still repays the amount in full by the loan maturity date. So in Australia, customers who negotiated 'interest only' loans back in 2012 have been hit with a massive increase in loan repayments between 30-40% on top of what they were required to pay before. The increase is a conservative amount, as one australian news reporter actually said that in some cases these amounts have increased up to 50%. Terrifying reality!

Imagine back in 2012, all these people signing up to interest only mortgages being advised and blindly accepting the risks at the other end of an interest only period.

“Now you’re aware that....”

“Yip yip uhhuh yip”

“....after the 5 year interest only term.......”

“Uhhuh yip yip mmhmmmm”

“........your interest only mortgage will mature to principle and interest payments?”

“Just hurry up and give me the god damn pen”

5 years later.....

“:’( the bank deceived me it’s their fault!”

Wait, what?

Banks in NZ and Australia will give you a 30 year loan where there is no interest for the first 5 years?

I'm assuming they only give that to people who they think won't be able to pay it off in 5... or am I mistaken?

No, its that you pay interest only (with no repayment of principal) for an interest only period of 3-5 years. Mostly IO lending is for investors, but a big chunk of it is for owner occupiers. IO repayments can be 30-50% cheaper than principal repayment. It's a device to increase leverage on available equity.

@TainuiBabe What do you mean the differed principal is added on? During a home loan holiday for example, deferred interest is added to the balance but not principal.

I don't doubt any of that, but the question for me is how rigorously is this procedure applied. Plainly in Australia the rules about affordability were not rigorously applied or were applied in a way that was utterly self serving (ie borrowers expenses were assessed not vs actuals but as against a level which was close to the poverty line). This is not a question of a bank making a "mistake", it was a deliberate blind eye. A surprisingly high portion of interest only loans have been made to owner occupiers. From memory it was about 40% of interest only borrowing (?) but I stand to be corrected on that. If I am right, that level of owner occupier IO borrowing is bonkers. To be honest, any level of owner occupier IO borrowing in excess of 0% is bonkers. Given the rise in household debt and the level of competition in the mortgage market (particularly with new entrants like SBS coming to town) I strongly suspect there has been a steady decline in underwriting standards over the last 5 years. I suspect IO lending is one of the key devices used by borrowers and lenders to get over the line in terms of "affordability". Borrowers have been using IO lending to buy houses that they otherwise cannot afford, but this has been viewed as a risk free option cos both borrowers and lenders take the view that market is "rock solid" so why worry..

'The main driver has been a decline in the Real Estate Institute of New Zealand's lower quartile selling price in Auckland South. This has declined from $666,500 in February to $620,000 in June'

That's a pretty big fall since February.... 'Honey did you see that $46,500 I had kicking around in the living room? It seems to have disappeared!'


Yes and this is good news for home owners who will have no such regulatory constraints. All those home handyman type jobs that cost $70 to $100 an hour that the landlord must pay, as compared to a home owners free own labour.

Love these rules that help clear the bias of the system to landlords. The penny must surely be dropping that the game has changed - though our resident spruikers are still trying their hardest to pretend their strategy of old is still relevant.

Early days yet fhb's...keep your wallets closed and enjoy the rising interest rates that will soon boost your savings and lower house prices further.


No, don't know many around here, as most live in foreign lands or Auckland.

The correlation between rising interest rates and falling asset prices is a point that the average person doesn't understand. You are spot on!

The vast majority of owners will have bought years ago and will be sitting on massive gains. $46,500 is just noise to them.

it all seems OK till you double check the facts. The historic loan period, correct me if I'm wrong, was a 20 year term and not 30 years which puts weekly repayments in Auckland closer to $746 per week after you've saved $124,000 by the ages of 25 to 29. That's a quite a difference compared to $647 per week advertised. Soon banks will be loaning over 40 years so will housing be more affordable?

Hi Roadhouse,

All of the mortgage payment calculations in the reports are adjusted to 30 year terms to enable a consistent comparison. Cheers.

Back in the Day, it was assumed that an average FHBer couple on an average income could pay their 25-year mortgage off in..... 7 years! Sure, that assumed a career path with rising wages etc, and time moves on, but it highlights that over the last 40 years something's gone wildly astray.....


If you amortizing 2% pa of the outstanding balance it takes exactly infinity years to reduce the balance to zero.


It turns out this stupid Auckland rail link is now going to cost "hundreds of millions " more because they "under-estimated " potential users .

Why are we going to have more and more people working in the city centre ?

Do we want it to be like a major congested city like Hong Kong or Shanghai ?

Its time our Urban planners started planning decentralized office parks and new business districts in Silverdale , Pokeno , Kumeu , and Albany , because the CBD cannot cope right now and its going to get even more congested , and increasingly impossible to do business there .

Besides which people should be able to work either closer to home to prevent up -to 1 hour commutes , or as technology improves they could even work from home in some cases .

Building railways a-la the 17th century is just plain stupid , even if the trains a bit faster

Not sure how you can construe the number of rail users as a bad thing.. the cost to the nation of getting that same number of people to work via private passenger transport is much larger.

So the imaginary first home buying couple about to purchase in South Auckland will now be faced with the fuel tax to offset their recent salary rise .Should Stats NZ produce regional CPI data


Nearly half a million dollars for a property that looks like a chop shop. If I was a FHB, I'd still wait.


The sleepout is very nice. Could possibly rent it to HNZ?

Eco bird will think there is good value in this

I'm hoping not to come across as pretentious here but has anyone driven around the areas where lower quartile South Auckland homes are located recently? The majority of commentators on this site would last about 5 secs.

Auckland - relative to a similar sized city in a developed country - has a high violent crime rate, so it may well be more affordable (although I would debate that anyway) to live in Weymouth but I wouldn't ever live there.

Decent engineering jobs out that way, ok homes, certainly it does depend on which areas of South Auckland you are taking about. They can vary wildly, certainly more stark contrasts than in other parts of Auckland but then again it is the more industrial area of the city.

Agreed, but the lower quartile housing is not in the nicer areas.

It's incredible how Auckland is still very expensive for any buyers. I was talking to a friend and they are looking at a 3 bedders in Grey Lynn on a tiny section and needs a fair bit of work. As a comparision, what they are looking at paying there is the same as what you can get here in Brisbane's New Farm (an identical area like Grey Lynn/Ponsonby)

Stop, please it gets depressing just thinking about it. If not for the future generations, which is a worry but also selfishly. Already too old to move to Aus, although visiting family and friends back there is refreshing.


Yes Moa and that is another example of why AKL is being found out. Its astoundingly mispriced and will continue to correct. Negatively geared Landlords (which are 95% of them) are taking a bath mark my words I know a few.

These definitions of affordability are made by the same people who consider a My Food Bag delivery affordable vs. the cost for the whole family eating out at a Metro top 50 restaurant. Let them eat cake.

You are right in the sense that we are not trying to measure housing affordability for people on low or no incomes; ours is home loan affordability. And it is based on median income earners in the 25-29 age group, a group we think best matches first home buyers (or would-be first home buyers). So there will be half of everyone in that group who earn less, and who will find it tougher than our iindex (and half earn more who will find it easier).

For housing affordability for those on low incomes (rent or purchase), check the research done by the Salvation Army.

Media / News will report both side. If today says affordable will soon have an article indicating how unaffordable house are in NZ.

Comittee...Comittee.....Why is government delaying Overseas Investment Amendement Bill.

A committee is a group of people who individually can do nothing, but who, as a group, can meet and decide that nothing can be done. Fred Allen

More and more first home buyers in the last months as a previous article suggests and I know some 6 family who bought their first home recently. So they think its affordable and is a good time to buy. May be they all are well above the so called avg income. aah well....
More the first home buyers joining the home-owners list, the less the chance of of house-price correction, i guess !

Rastus, you say for first home buyers to enjoy the rising interest rates and lower house prices????
Firstly interest rates are not rising whatsoever and secondly if they did go up the the first home buyers will be paying the higher interest rates and probably won’t get a loan due to servicing problems.

Interest rates are definately rising in the US and therefore the cost of borrowing for our banks also increases, as our banks mainly rely on the US banks for funding our mortgages. Add to the fact that our Australian Banks have already had two credit downgrades and are looking at a possible third downgrade, then our banks will have their cost of borrowing increase quite a bit. Our banks then need to pass on any cost of interest rate rises to their existing customers and finally their potential FHB's. For the existing customers, rates will defintely be priced in if you are floating. For potential buyers who are atill looking, they will be offered a maximum loan amount reduced to purchase, which will have an on-flow effect to how much an FHB can pay and service that loan. In other words, bank shareholders take a cut, or the bank lends less, which forces down the asset prices and also the banks risk.

Australian Banks have already had two credit downgrades and..

Are you talking about the Moody's rating last year ? Does it have a real impact in interest-rate so far ??

That was the most recent credit downgrade to my knowledge, however they also stated that they didn't downgrade further due to the "Australian Government Gaurantee" on deposit holders, which has now recently changed. The Australian government can no longer afford to pay bank creditors for their risk. They effectively introduced the same OBR policy that we did about 3-4months ago, and it was quickly signed off with only a handful of MP's and it wsn't covered on the mainstream news.

Tainui Babe, we have been hearing about these interest rates rises for years now and what has happened?
Obviously at some stage they may move up a wee bit, this will only make it harder for first home buyers to service their loan.
Rates have dropped slightly recently with some of the Banks, and the majority of people are on fixed rates anyway.

Yes it will defintely hit FHB's if they have already bought, and it will hit ALL existing bank customers with existing mortgages on a floating rate. You will need to search the RBNZ website for data on percentages of customers on fixed and floating rates, but traditionally it has always been about 50/50, as some customers are chasing capital gains and therefore will be hit with penalties if they decide to cash in and sell off some of their portfolio if they are on a fixed rate. Owner-Occupiers tend to fix for stability, as they bought the house as a base to live in and work from. If the RBNZ stats are correct as to how many loans were made to investors (who were most likely chasing capital gains in Auckland), then one could assume that there are alot of investor/punters out there who are still floating.

Tainui Babe, I would Doubt that there were that many investors would be floating!
Fllating is so much higher so,unless you were going to sell then you would be on a fixed rate.

Is Fllating a typo for 'floating', or 'fellating'? Because there are some depths I will not sink to just to get a mortgage. Your mileage may vary.

I think there are several problems with your methodology:
- an assumption of 25-29 years old is too young for first home buyers in Auckland. 29-33 would be much more realistic.
- It's a big call to assume a 25-29 year old could have saved 75k by that age. Many graduates have student loans which eat into their ability to save. The high cost of living in Auckland also limits the ability of young people on graduate salaries to save.

TM2, looks like the naysayers have disappeared down their rabbit holes for the night and not answering your pertinent questions

You will love this... https://youtu.be/4bf3JtSgIY4

Thanks TB I've seen that, but have you seen this explanation,

No, but I did follow your link and then decided not to read it based on the fact that he is in Real Estate and therefore has vested interest in still earning an income. To put it mildly, he has skin in the game, but I also hold the same view over banks and their economists on the banks payroll. Searching for independent analysts is pretty tough these days.

Wow that's just crazy if you wrote him off even before you saw what he had to say. He had verifiable facts and a sound argument without hype which is the best part, he avoids the hype that so many are guilty of.

Probably out doing their second jobs as most of them are very hard workers I would’ve thought, going by their postings.

I'm a Gen X princess I'm afraid. I NEVER worked a weekend in my life and I would certainly never work two jobs when one job pays for my good lifestyle. But then again, I don't own debt, so I can do what I like with my time and choose contracts as I please. It is about lifestyle choices and freedom from getting back onto that debt slavery cycle where you realise your boss is an A-Hole and you can choose to flick him the finger or suck it up.

How can you tell, it is not as though they advertise. Mind you though I am looking at a genx'er now and I can definitely say two jobs is never enough, they need to have all the opportunities for work and side businesses. Cannot keep up with them, especially since at jobs I stopped at 4, that was literally the limit (with 3-4 hours sleep/downtime), but there was an occasional good gig thrown in so perhaps I could stretch to 5 at once... nah the burnout rate eventually catches up nowadays.


It doesn't matter. It's either up or down. Furthermore it's the North Shore *yawn*.


What reserve land with no other human habitation? I am there with you on that. Although the food, toilet and water access leaves a lot to be desired. However I hear there is a more regular ferry now.