New report says improvement in affordability due to recent rate cuts and rising wages
First-home buyers have a better chance of buying property in Auckland as falling mortgage interest rates are making the housing market more affordable, according to Interest.co.nz’s latest report.
The Home Loan Affordability Report measured how much of an average first-home buyer’s take-home pay would be eaten up by the mortgage payments on a home purchased at the REINZ’s lower quartile selling price in each region – with mortgage payments considered “affordable” if they take up 40% or less of a buyer’s take-home pay.
The report revealed that mortgage payments in Auckland have been under the 40% affordability threshold for first-home buyers since March 2019, with the most recent mortgage cuts seeing affordability drop to 35.77% in September 2019 – the lowest it has been since September 2014.
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While the report said that the improvement in affordability has largely been driven by falling interest rates, it also noted that a 10.3% rise in take-home pay for first-home buyers in Auckland has also played a part in making the market more affordable.
“The improvement in affordability occurred in all districts within the Auckland region,” the report said. “It means that six of the region’s seven districts are now considered affordable for first home buyers, with the North Shore being the only district where mortgage payments on a lower quartile-priced home would take up more than 40% of typical first home buyers’ take-home pay.”
