Nick Smith says figures for first home buyers nationally show housing is more affordable than when National became government.

The Government says first homes are more affordable, despite a new measure showing houses are out of reach for the majority of first-time buyers.

Four-fifths of potential first home buyers could not comfortably afford a house in New Zealand, according to an MBIE report.

The long-delayed housing Housing Affordability Measure (HAM) was finally released on Wednesday after almost two years of delay, and Nick Smith said the measure's nationwide figures for first-time home buyers showed housing was actually more affordable than when National became government in 2008.

The renting households HAM looked at covered roughly a third of the population.

However Building and Construction Minister Nick Smith told Radio New Zealand the measure's nationwide figures for first-time home buyers showed housing was actually more affordable now than when National became government in 2008.

The information in the new HAM measure only covered price information up to two years ago.  Smith told Radio New Zealand that Auckland was the city with the biggest problem with housing affordability but over the past six months house prices had remained "dead-pan flat".

"The Auckland housing market has been moving very aggressively. We've seen rates of increase of 15 to 20 per cent over the last five years.

"There's a generally commentary and acceptance that with the growing supply that is now coming on stream that that market has significantly cooled off."

Smith said while markets were still warm in Wellington and Queenstown the MBIE data was "incredibly encouraging" for Christchurch.

He said HAM showed housing affordability in Christchurch was the best it had been this century.

That was not because of the 2011 earthquake, he said.

HOW DOES HAM WORK?

HAM uses household level data on income, rents, and house prices to paint a picture of affordability in New Zealand, broken down by territorial authority or ward in Auckland. It finds the affordability level by measuring the income left over after housing costs, and then comparing that to a baseline figure extracted from the 2013 household economic survey. 

That benchmark figure is $662 per week, adjusted for inflation and household size. HAM counts the amount of households that are currently renting who would have less than that left over after mortgage payments on a lower-quartile house - a small "starter" home.

"We don't say that $662 is a magic number and anything less than that is un-liveable and anything more than that is absolutely living well,"MBIE deputy chief executive Chris Bunny said.

The $662 figure was what the median household New Zealand household had left over after housing costs in June 2013.

Berl chief economist Ganesh Nana said the measure was robust but didn't say much people didn't already know.

"Affordability clearly got worse during the leadup to the GFC," Nana said.

"Since then it's been relatively stable at the national level, but there's clearly been a marked deterioration in affordability in the Auckland area."

The difficulty of saving for a deposit isn't directly measured by HAM, as the government don't have detailed enough data on household wealth. 

Nana said the measure would be stronger if initial deposit price was calculated, but understood the reasons why it wasn't included.

Source: Stuff.co.nz