Home affordability in Otago overall is the second-best in the country after Southland, but the Central Otago Lakes area remains the least affordable in the country, even for a couple contributing from the equivalent of one and a-half pay packets.
Home affordability across the country had improved in an unbroken run through 2008 as interest rates fell sharply and house prices fell.
It was boosted slightly by wage inflation and tax cuts, according to the BNZ-sponsored home loan affordability index produced by www.interest.co.nz"[However], that run of improvement ended in February, March and April this year, as house prices stopped falling and interest rates began to bottom out," interest.co.nz editor Bernard Hickey said in a statement yesterday.
Central Otago Lakes affordability reached its highest point of 138.4% in October 2007, while a year ago it was 127.5%.
Payments beyond 40% of income are considered unaffordable on the index.
Even at 50.1% affordability for couples/households, for June, Mr Hickey said Central housing was still not affordable for families.
"Median-priced housing is not affordable for families in Central Otago Lakes, even when both adults work," Mr Hickey said.
However, he noted housing may be affordable for couples, with the male on a full-time wage and female on a half wage, in lower-quartile priced housing, lower-quartile being homes about $243,0000, compared to the national median of $340,000.
In one telling statistic, an individual in Otago will take almost six years to save a 20% deposit.
Nationally, it is 8.4 years but for Central Otago Lakes that figure pushes out to 11.5 years.
Similarly, in Otago overall, the affordability index, based on one median income to pay for a mortgage, is unchanged in June for two months at 39.2%.
Nationally it is 56.3%and for Central Otago Lakes that single-income affordability is 78.4%.
"Essentially, the median income for the typical [Central Otago Lakes area] is not high enough to buy a median priced house, even with a 20% deposit," Mr Hickey said.
The indefinite delay of tax cuts planned for 2010 and 2011 put all the emphasis on interest rates and house prices as being the sources for further improvement, Mr Hickey said.
"Housing affordability is unlikely to improve much further without further significant falls in house prices, given wage growth is likely to be subdued in the next couple of years, without further tax cuts and as unemployment rises," he said.
Affordability index
Top five least affordable regions
Central Otago Lakes78.4%
Auckland 67.5%
Nelson/Marlborough 60.6%
Wellington 57.6%
Northland55.8%
