Housing affordability at record levels in Christchurch, improving in Auckland, latest interest.co.nz Home Loan Affordability Reports show

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By Greg Ninness

Housing is becoming more affordable in Auckland with large parts of the region now considered affordable for typical first home buyers, according to interest.co.nz’s latest Home Loan Affordability Reports.

Auckland South, which includes all of the suburbs previously contained within the boundaries of the former Manukau City Council, has joined Papakura and Franklin as being classed as affordable for typical first home buyers.

That means that the mortgage payments on a lower quartile-priced home in those areas would be less than 40% of the take home pay of typical first home buying couples (defined as couples where both are aged 25-29 and working full time, earning the median wage for couples of their age in Auckland).

The main driver has been a decline in the Real Estate Institute of New Zealand’s lower quartile selling price in Auckland South. This has declined from $666,500 in February to $620,000 in June.

That, combined with a modest fall in the average two year fixed mortgage interest rate, which has declined from 4.72% to 4.65% over the same period, has seen the amount that would need to be set aside each week to meet the mortgage payments on a lower quartile-priced home in Auckland South drop by just over $61 a week, from $709.03 a week in February to $647.92 in June.

Over the same period, interest.co.nz estimates the combined take home pay for a typical first home buying couple would have increased from $1620.36 to $1631.18 a week.

That means mortgage payments on a lower quartile-priced home in Auckland South dropped from 43.8% of take home pay in February (above the 40% affordability threshold) to 39.7% in June (just under the 40% affordability threshold).

In Papakura the mortgage payments on a lower quartile-priced home would take up 36.5% of a typical first home buyers’ take home pay, and in Franklin it would be 36.8%.

Separate Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke’s Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand

North Shore still the least affordable place in NZ for first home buyers

However while the southern districts of Auckland are now considered affordable for typical first home buyers, the higher prices prevalent in the rest of the region are likely to keep a home of their own beyond the reach of many first home buyers unless they are on higher than average incomes.

The North Shore remains the least affordable place in the country for first home buyers, with a lower quartile price of $795,000 in June, which means the mortgage payments would be likely to eat up 52.5% of typical first home buyers’ take home pay.

In Rodney it would be 48.8%, in west Auckland it would be 44.1% and in central Auckland it would be 41.2%.

Outside Auckland, the only place considered unaffordable for typical first home buyers is Queenstown, where June’s lower quartile price of $690,000 made it the third most unaffordable place for first home buyers in the country, after the North Shore and Rodney in Auckland.

Although many other parts of the country have shown significant increases in lower quartile prices over the last few years, they still remain within affordable limits for typical first home buyers.

For example the mortgage payments on a lower quartile-priced home in Tauranga would take up 34.8% of a typical first home buying couple’s take home pay. In Wellington City it would be 31.3%, both well below the 40% threshold.

Housing most affordable for first home buyers in Christchurch for at least 14 years

However first home buyers who want to live in one the major centres should probably consider Christchurch as an option.

Housing is now more affordable for typical first home buyers in Christchurch than it has been at any time since Interest.co.nz began compiling the Home Loan Affordability reports in January 2004.

The REINZ’s lower quartile selling price for Christchurch dropped to $345,000 in June, the lowest it has been since July 2016.

The mortgage payments on a home purchased at $345,000 would take up just 20.2% of the take home pay of typical first home buyers in the city, a record low since the Home Loan Affordability Reports have been published.

Whanganui versus Invercargill

It’s a toss-up between Whanganui and Invercargill as the most affordable urban centres for first home buyers, with lower quartile prices of $167,000 and $169,000 respectively, which means typical first home buyers in both cities would probably only need to to set aside about 11% of their net pay each week to service the mortgage on a lower quartile-priced home.

The individual affordability reports for all 41 of the locations monitored are available by clicking on the appropriate links in the box to the left.

Home Loan Affordability – First Home Buyers

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