Home affordability took a turn for the worse in May - and
Queenstown was among the top three areas which were the least
Affordability worsened slightly nationwide as Reserve Bank
interest rates rises more than offset the small decline in
national median house prices, according to the monthly Roost
home loan affordability report.
The North Shore in Auckland was least affordable, reclaiming
its title as the most expensive area, relative to income, at
97.4%, followed by central Auckland at 95.1% and Queenstown
Roost compares the percentage required from a single income
to service an 80% loan, based on an area's median house
price. Levels over 40% are considered unaffordable.
Southern affordability also worsened in Dunedin (48.5%),
Timaru (48%) and Christchurch (66.3%). While there was a 0.5%
fall in the national median house price in May, affordability
fell in 16 of the 24 regions, with two increases in the
Reserve Bank's interest-driving official cash rate, Roost
home loans spokeswoman Colleen Dennehy said.
''Advertised floating mortgage rates rose almost half a
percent to around 6.25% in the first six months of 2014,''
she said in a statement.
Banks had been more aggressive in recent months in offering
cut-rate longer-term fixed mortgage rate deals, passing on
the benefits of low international and local funding costs,
Average two-year fixed mortgage rates fell 13 basis points to
almost 6% in May, taking two-year rates well below floating
rates on 6.25% by the end of May. Floating rates have since
risen to about 6.5%.
Affordability improved in Manukau, Gisborne, New Plymouth,
Nelson and Invercargill.