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Home affordability continues to decline

House prices have continued to rise in most regions throughout the country despite repeated predictions of a downturn in New Zealand’s residential housing market, figures released in the AMP Home Affordability Report for the June 2005 quarter show.

Monday, August 1st 2005, 11:12AM

The figures show that the market is leading into its fifth year of sustained growth in house prices.

“Over the past three years, the market has reached unprecedented levels of activity with sales volumes well in excess of those achieved at the top of any previously recorded real estate cycle,” says Graham Crews, senior lecturer in Real Estate at Massey University.

“The prime driver of that growth has been the strong performance of the domestic economy and, with few xceptions, those gains have been spread throughout the country,” he says.

Interest rates inched up one point over the quarter despite Reserve Bank indications that they may lift the rates further while, over all, the New Zealand Home Affordability Index for June reflected a quarterly decline of 1.9%, meaning home affordability has now declined for five consecutive quarters. Also, after lifting 1.5% in the previous quarter, average weekly wages also moved up a further 1.6% in this quarter.

“What is particularly interesting about the decline in home affordability is that this continued strength in the housing market is happening despite business confidence worsening in the three months to June, weaker consumer spending seen in May and much talk of the economy being on the verge of a predicted downturn,” says Greg Camm, managing director of AMP Financial Services.

Although residential sales reported by the Real Estate Institute of New Zealand showed a rally in May, sales were down on the previous two years. Quarterly dwelling sales of 28,554 were 6% down on the same period last year (30,381) while the New Zealand median dwelling price lifted 2.2% to $275,000 at the end of the quarter.

This figure is still down on the all-time high of $280,000 reached in March of this year.

In terms of median dwelling prices, in the quarter eight regions reported a quarterly rise, as well as a decline in home affordability.

Two North Island provincial regions reflected the steepest decline with Northland at 13.1%, followed by Taranaki (9.5%), Southland (6.7%), Auckland (4.8%), Canterbury/Westland (5.5%), Wellington (3.4%), Hawke’s 2.1%) and Manawatu/Wanganui (0.2%).

Meanwhile, three regions recorded a quarterly improvement in affordability. Nelson/Marlborough ranked highest in improvement for the second consecutive quarter at 4.3%, followed by Otago (2.8%), and Waikato/Bay of Plenty/Gisborne (0.2%). Both South Island regions also reported quarterly falls in median dwelling prices.

All 11 regions recorded a 12-monthly decline in home affordability for the fourth consecutive quarter.

Southland remains the most affordable region whilst Manawatu/Wanganui continues to hold second position. Auckland remains the least affordable region followed by Nelson/Marlborough.

« NZPIF Conference 2005Auckland market has turned, says Crokers »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

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