Home affordability has improved by 4.4% and mortgage rates are at a two-year low meaning now may be the best time to purchase property, according to the latest study by Massey University.
In its latest Home Affordability Report, Massey University reports increasing affordability as a result of declining house prices, with the June to August quarter showing a 2.1% improvement in affordability.
According to associate professor Graham Squires, this is primarily down to the price drops nationwide, especially in the most expensive areas of the country.
“Across New Zealand, median house prices decreased by 3.4% this quarter,” Squires said. “In dollar terms, that means the median price decreased by $19,500.
“Interestingly, the country’s most expensive regions – Auckland and the Central Otago Lakes – were amongst the regions to show declines in house prices. Auckland’s median house price fell by $14,000 and Central Otago Lakes’ by $20,000 over the quarter.”
Results were very varied across regions however, with the Nelson/Marlborough region showing an 8.5% decline in affordability – the largest in the country. Squires said this was also driven by increasing median house prices, which rose by $34,000 over the last quarter.
Ongoing low mortgage rates are also a significant contributor to affordability, with New Zealand currently seeing the lowest rate in the two-year fixed data series.
“The ability for homeowners to repay mortgages looks favourable in the short term,” Squires said. “Interestingly, lower rates are coinciding with a cooling property market in many regions.”
Despite this, Queenstown and Auckland remain the country’s least affordable regions – though price-to-income ratios are starting to contract.
“House prices in Central Otago Lakes have moved from 13.7 to 13.2 times the annual wages,” Squires said. “Of course, this is still significantly higher than the national ratios that were common in the 1990’s – when median house prices were around four times annual wages.”