Home affordability improves again

That’s according to AMP Banking’s home affordability survey conducted by Massey University.

Its index, which combines data on housing prices, mortgage interest rates and average weekly earnings, showed an 11.1% improvement in the June quarter.

While in the March quarter the year-earlier comparison was still negative, homes in the June quarter were 8.6% more affordable than in the June quarter last year. That’s the first annual improvement since the September quarter of 1999.

"The report reinforces that it is an ideal time for first home buyers and existing home owners to consider purchasing," says AMP Banking marketing manager Karen Clough.

"The reduction in interest rates, combined with lower dwelling prices and a slight increase in the national average weekly wage, have resulted in an improved buyers' market. It's also a good time to be reviewing your home loan and making sure it best suits your circumstances," Clough says.

The median house price fell 2% in the quarter from $173,500 to $170,000 and average weekly wages continued aslow but steady rise. The Reserve Bank has cut its official cash rate, from which other interest rates are set, from 6.5% to 5.75% since the middle of March.

Affordability improved most in Manawatu/Wanganui, rising 20.3% in the quarter, followed by Southland, up 17.2%. Three of the top four regional improvements were in the South Island.

The smallest improvements were in Nelson, up 5.1% in the quarter, and in Wellington, up 5.9%. The biggest market, Auckland, showed a robust 13.5% quarterly improvement.

Annually, affordability declined in only two regions, Northland, down 6%, and Taranaki, down 4.1%. The largest annual improvement was in Otago, up 13.9%, followed by Canterbury/Westland, up 13.2%.

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