Latest Home Affordability Report shows the worst housing affordability in its 18-year history
Affordability for first-home buyers is currently at its lowest level in the 18-year history of interest.co.nz’s Home Loan Affordability Report.
Read more: CoreLogic: Housing affordability dramatically declines across New Zealand
The report uses REINZ’s lower quartile selling price, mortgage interest rates, and the median after-tax pay of 25- to 29-year-olds, to determine how much aspiring first-home buyers would need to set aside for a 10% or 20% deposit on a lower quartile-priced home, how large a loan they would need to take out on the corresponding mortgage, the amount required for mortgage payments at current interest rates, and how much of their income that would use.
Read next: Why is housing affordability an issue in New Zealand?
The Home Loan Affordability Report showed that a typical first-home buyer would need to save $61,000 for a 10% deposit and borrow $549,000 on a mortgage to buy a home at October’s national lower quartile price of $610,000, interest.co.nz reported.
The report also estimated that first-home buyers would need to set aside $849 a week to meet the payments on their mortgage at October’s average two-year fixed rate of 5.88%. That would eat up 46% of the take-home pay of people on average wages, putting it well above the 40% affordability threshold.
The majority of regions were now also considered unaffordable for buyers with a 10% deposit, with Manawatu/Whanganui, Taranaki, Otago, and Southland the only regions where the mortgage payments on a lower quartile-priced home would be below 40% of take-home pay for typical first-home buyers.
Affordability is definitely easier for hopeful buyers who can scrape together a 20% deposit, although it would be no easy task for those on average incomes.
Read more: Use our free home affordability calculator to see if you can get your dream home
Around the regions, a 20% deposit for a lower quartile-priced home would range from $72,000 in Southland to $170,800 in Auckland.
But even with a 20% deposit, typical first home buyers would still find the mortgage payments unaffordable in Auckland and the Bay of Plenty, and close to unaffordable in Waikato, Wellington, and Nelson/Marlborough, interest.co.nz reported.
