Home affordability took a turn for the worse in May - and Queenstown was among the top three areas which were the least affordable.
Affordability worsened slightly nationwide as Reserve Bank interest rates rises more than offset the small decline in national median house prices, according to the monthly Roost home loan affordability report.
The North Shore in Auckland was least affordable, reclaiming its title as the most expensive area, relative to income, at 97.4%, followed by central Auckland at 95.1% and Queenstown on 94.5%.
Roost compares the percentage required from a single income to service an 80% loan, based on an area's median house price. Levels over 40% are considered unaffordable.
Southern affordability also worsened in Dunedin (48.5%), Timaru (48%) and Christchurch (66.3%). While there was a 0.5% fall in the national median house price in May, affordability fell in 16 of the 24 regions, with two increases in the Reserve Bank's interest-driving official cash rate, Roost home loans spokeswoman Colleen Dennehy said.
''Advertised floating mortgage rates rose almost half a percent to around 6.25% in the first six months of 2014,'' she said in a statement.
Banks had been more aggressive in recent months in offering cut-rate longer-term fixed mortgage rate deals, passing on the benefits of low international and local funding costs, she said.
Average two-year fixed mortgage rates fell 13 basis points to almost 6% in May, taking two-year rates well below floating rates on 6.25% by the end of May. Floating rates have since risen to about 6.5%.
Affordability improved in Manukau, Gisborne, New Plymouth, Nelson and Invercargill.
