It is now cheaper for people in Otago, with the exception of Central Otago, to buy their first home than it is to rent a property.
While it is 4.1% cheaper to pay for the mortgage on a typical first home than it is to rent in much of Otago, it would cost 5.5% more to pay for the mortgage in the Central Otago Lakes area, where property is significantly more expensive, figures released from interest.co.nz last month reveal.
In April, the average house price in Otago was $230,000, up 3.1% on March, but down 4.6% over the year, while an average house price in Central Otago Lakes was $435,000, up 2.4% on March but down 9.4% over the year.
Otago Property Investors Association president Cliff Seque described the property market in the area as "reasonably buoyant" compared to the rest of the country, where it was often difficult for first-home buyers to break into the market.
"The biggest issue for first-home buyers is raising the 20% deposit," he said, which was required by most banks and was a stumbling block in the transition from renting to buying.
The interest.co.nz figures showed national rent and mortgage payments in April were almost even.
A mortgage for an entry-level house would cost 23.2% of a typical first-home buyer's income, whereas rent for a similar house would cost 23.3%.
The typical first-home buyers in the scenario were assumed to be a couple aged 25-29, with a weekly income of $1331, with no children and a 20% deposit saved for a lower-quartile home.
The average weekly take-home pay for a first-home buyer household in Otago in April was $1271.06.
Average rent for a three-bedroom house in Otago was $253 a week in April and would take 19.9% of typical first-home buyers' income to pay.
However, mortgage payments, at a fixed rate of 6.24% for a lower-quartile house of $165,000, would cost $200.56 in April, 15.8% of that income.
Other areas where buying was positive were Hawkes Bay and Gisborne, Manawatu and Wanganui, Taranaki, Canterbury and Southland.
In April, for those living in the Central Otago Lakes district the average weekly income was the same as Otago, but it took 27.7% of first-home buyers' income to pay the average rent of $352 a week.
Mortgage payments for a lower-quartile house of $320,000 would cost $421.99, 33.2% of that income.
Renting was also more favourable in Northland, Auckland, Waikato and the Bay of Plenty, Wellington and Nelson and Marlborough.
More at: www.interest.co.nz
