Improvement in affordability

Falling mortgage rates are starting to provide some relief to people trying to buy a home, the latest Massey University home affordability report shows.

Massy senior property lecturer Susan Flint-Hardie said even Auckland was showing some signs of improvement in affordability, improving 4.9% since the last report in June.

''Having said that, affordability in Auckland has still decreased 16.6% over the past 12 months.''

The biggest improvements in affordability in the latest quarter had been in Central Otago Lakes (10.5% better), Southland (9.6%), Manawatu-Wanganui (8%), Northland (6.2%) and Taranaki (6.1%).

Not surprisingly, those regions also experienced the largest falls in house prices in the period, and, except for Central Lakes and Southland, had seen wage growth, she said.

Similar conditions explained the index figures for Auckland (4.9%), and Hawkes Bay (4.6%), both of which saw wage increases.

Improvement in affordability was more modest in Otago (0.4%), Canterbury-Westland (0.5%), Waikato-Bay of Plenty (2%) and Wellington (3.2%).

The report covered the period from June to August.

Dr Flint-Hardie said while affordability trends showed some improvement in the report, the relative levels of affordability across the country had not changed much.

The small improvements were coming off the back of historic levels of unaffordability.

Auckland remained 52% less affordable than the national average - down slightly from 56% last quarter, but close to the historic high.

The Reserve Bank had reduced the official cash rate by 0.25% since the period covered by the report, she said.

''While that reduces borrowing costs for home buyers, improving affordability in the short-term, it remains to be seen whether lower mortgage rates also push up house prices in the longer-term.''

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