The monthly New Zealand housing affordability measure, collated by interest.co.nz, was largely unchanged in February because a small rise in median house prices offset the benefits of another fall in mortgage rates, following a Reserve Bank official cash rate cut to 3%.
Interest.co.nz predicted housing was likely to be largely affordable for most first home buyers by the end of 2009 if prices kept falling, interest rates fell further and tax cuts were implemented, editor Bernard Hickey said in a statement yesterday.
Home affordability is based on the 40% threshold proportion of after-tax income considered prudent to sustainably own a house, with costs above that starting to become unaffordable.
"Affordability recovered dramatically through 2008 as both the slumping housing market and an unprecedented fall in fixed mortgage rates made it easier for both first home buyers and established households to buy houses," Mr Hickey said.
There were affordability improvements in four regions, Auckland, Taranaki, Canterbury and Central Otago, as house prices fell in those areas, but the other eight regions, Northland, Waikato, Hawkes Bay, Manawatu/Wanganui, Wellington, Nelson/Marlborough, Otago and Southland, showed falls in affordability as house prices rose in those areas.
Southland remains the cheapest region in the nation.
"The only complication for first home buyers is the increasing requirement by banks for a deposit of 20% or more, which is making housing effectively less affordable," Mr Hickey said.
The pause in the improving trend for housing affordability was not expected to last for too long given predictions that house prices and interest rates would fall further later this year and fresh tax cuts later in 2009 would also increase take-home pay and improve affordability, Mr Hickey said.
