Report shows regions with most affordable mortgages
Prices at the bottom of the market are showing signs of stabilisation, reflecting the impact of the government’s efforts to deliver a more sustainable housing market and support first-home buyers (FHBs) into homeownership.
The Real Estate Institute of New Zealand’s (REINZ) latest data found that the national lower quartile selling price increased marginally to $592,500 in May 2021 from $591,000 in April – with both figures lower than the record-high lower quartile price of $598,000 set in March.
Of the REINZ’s 12 sales regions, the lower quartile price in Northland, Waikato, Bay of Plenty, Hawke’s Bay, Wellington, and Otago was down in May compared to April but remained unchanged in Southland.
Meanwhile, the lower quartile price increased in Auckland, Manawatu/Whanganui, Taranaki, Nelson/Marlborough, and Canterbury last month compared to April, according to REINZ.
Interest.co.nz’s Home Loan Affordability Report showed the main measures of housing affordability in each region based on a couple working full time at the median rates of pay for 25- to 29-year-olds and purchasing a home at the lower quartile selling price in each region.
The average of the two-year fixed mortgage rates offered by major banks in New Zealand declined marginally to 2.52% in May 2021 after remaining at 2.53% for the previous three months – a record low since Interest.co.nz’s Home Loan Affordability report was first released in 2002.
The figures for Auckland stood out from the rest of the country. With the exemption of Queenstown, FHBs outside Auckland can still find affordable mortgage payments on a lower quartile-priced home, the report said.
However, in Auckland, mortgage payments on a lower quartile-priced home bought with a 10% deposit would eat up nearly 43% of a typical first-home buying couple’s after-tax pay, making the city unaffordable despite interest rates at historic lows.
The report explained that it would take a typical first-home buying couple 4.6 years to save a 10% deposit for a lower quartile-priced home in Auckland – that is, if they could save 20% of their after-tax pay every week. However, it would take the couple 9.3 years if they wanted to save a 20% deposit.
