Home affordability has improved markedly in the south of the South Island, but the Central Otago Lakes district median house price remains out of reach for many.
The BNZ home affordability survey for "typical buyers" rates Central Otago Lakes as the least affordable place in New Zealand to buy a median home.
It now takes 76.3% of one median income to pay the mortgage on a median-priced Central Otago Lakes house bought in May, up from 71.5% in April.
A typical buyer is assumed to be in the 30 to 34 age group. The index was 123.7% a year ago and 92.1% five years ago. The affordability index reached its highest point of 138.4% in October 2007.
Anything above 40% of median income is considered unaffordable.
"Essentially, the median income for the typical buyer is not high enough to buy a median-priced house, even with a 20% deposit," the BNZ said.
However, buyers in Central Otago Lakes might find the lower-quartile price affordable.
It was also true that a couple or family with more than one income might find the median house price affordable.
That depended on household income, the bank said.
Household income was a key criteria for lending institutions.
Based on the BNZ's standard household profile, it now took nearly 49% of the median take-home pay to service a mortgage of a median home bought in May.
A standard buyer house-hold comprised one adult male working full-time, one adult female working 50% and one child aged 5 years.
"Median-priced housing is not affordable for families in Central Otago Lakes, even when both adults work," the bank said.
The affordability index is calculated assuming the house buyer already has the 20% deposit required by most banks.
Based on current income and house prices, it would take an individual 11.5 years to save that deposit in the district.
Things are looking much better for the rest of Otago, although the index does not separate Dunedin from some more rural areas.
According to the index, it now takes 39.2% of one median income to pay the mortgage on a median-priced house bought in May, down from April's 39.5%.
The index was 60.6% a year ago and 40.7% five years ago.
The affordability index reached its highest point of 63.8% in December 2007.
Based on the BNZ standard household profile, it now takes 25.1% of the median take-home pay to service a mortgage of a median-priced house bought in May.
The BNZ said median-priced housing was affordable for families in Otago when both adults worked.
"But home buyers can't take further improvement for granted. House prices and interest rates would have to fall again for affordability to get better."
BNZ general manager of strategy and marketing Blair Vernon said.
At a glance
Home affordability in May:
> New Zealand - *55.9%; median house price - $337,500.
> Central Otago Lakes - *76.3%; median house price - $427,500.
> Otago - *39.2%; median house price - $220,000.
*Percentage of one median income.
