Housing hurdles remain for buyers
CoreLogic NZ’s latest Housing Affordability Report revealed that despite falling property values and rising incomes, housing affordability remains worse than long-term averages.
The median property value is 7.7 times the gross annual median household income.
“The improvement in housing affordability... is broadly back to pre-COVID levels,” though home values continue to outpace incomes, said CoreLogic NZ chief property economist Kelvin Davidson (pictured above).
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Mortgage payments still high
Mortgage payments consume 54% of median household income, just shy of the peak of 56-57%.
“The current phase of strained mortgage affordability has lasted much longer, possibly placing many more New Zealand households under considerable financial stress,” Davidson said.
Deposit saving time improves slightly
While the time to save for a deposit has improved to 10.2 years, down from the peak of 13.6 years in late 2021, it remains above the long-term average of 9.1 years.
“The trend is positive, but for households to need more than a decade to save a deposit is a serious affordability challenge,” Davidson said.
Rent-to-income ratio remains elevated
Rents continue to consume 28% of household income, surpassing the long-term average of 26%.
“These households are likely to feel the strain even more acutely than the average figure suggests,” Davidson said.
Affordability outlook: Limited relief in sight
Despite potential rate cuts, Davidson cautioned that affordability improvements may be limited.
“Even if mortgage rates fall over the next 6-12 months, this could be offset by rising house prices... Any sustained improvement will require significant changes in housing supply,” he said.
Read the CoreLogic media release and download the Housing Affordability Report
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