Declining prices and falling interest rates are making homes more affordable
Declining house prices and falling mortgage interest rates are continuing to make homes more affordable across the country, according to a recent report.
The latest home affordability report from Massey University revealed a continued improvement in affordability on a national level from June to August 31, 2019. However, the report showed mixed results when viewed at the regional level.
“Overall, at the national aggregate level, affordability improved by 2.6% in the most recent quarter, which follows two previous quarters of modest improvements,” said Arshad Javed, senior lecturer at Massey University and author of the report. “[However, while] half of the 16 regions have shown improved affordability over the quarter… the other half have shown declines. Most of this is being driven by house price fluctuations, including in Auckland where the median house price declined by $40,000, resulting in an 8% improvement in affordability for the region.”
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Auckland remained the country’s least affordable region, despite a 4.7% decrease in median house price last quarter. On the other side of the scale, the West Coast is the country’s most affordable region, despite a 16.2% increase in median house price.
Meanwhile, 12 out of the 16 regions showed an increase in median house prices in the most recent quarter, which was partially offset by lower interest rates – but the impact of incomes varied across regions.
“Interest rates went down by 0.11% to 4.67%, which is a return to the medium-term trend of interest rate reductions,” said Javed. “Overall, incomes increased slightly by 0.6%, with the direction of change evenly split across all 16 regions. This ranged from a 2.3% decrease in Taranaki to an 8.8% increase in Tasman.”
