Thursday 10th July 2003
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Home affordability nationally fell 3.2% in the latest quarter. That followed a slight 0.7% improvement in the March quarter, but, compared with the June quarter last year, houses were 6% less affordable.
House prices rose 7.7% from $195,000 to a record $210,000 in the quarter while average mortgage rates fell from 7.83% to 7.58% and average weekly wage rate rose from $735.76 to $743.54.
"Given that low offshore interest rates will continue to push down fixed and floating mortgage rates, the fuel driving the strength in house prices will keep flowing for the time being," says AMP managing director Ross Kent.
"However, signs of overload are becoming evident in the form of high house price to income ratios, falling rental yields and the recent move of speculators into the housing market."
Graham Crews, senior lecturer in real estate at Massey, describes the housing market as abnormal.
"I cannot recall a situation where all the planets are in alignment and yet interest rates are dropping," he says. Usually, the Reserve Bank would be putting rates up to dampen activity, but the weak global economy means the reverse is happening.
Despite the national decline in the latest quarter, affordability improved in six of the 11 regions, notably Otago, up 4.3%, and Taranaki, up 4.2%, while Auckland affordability improved 1.1%.
The steepest declines in affordability were in Nelson/Marlborough, down 8.6%, Hawkes Bay, down 7.1%, and Wellington, down 5.3%.
Compared with a year ago, affordability was down in all regions except Northland, where it improved 4.2%, and Manawatu/Wanganui, up 0.2%. The biggest annual declines were in Nelson/Marlborough, down a massive 34.9%, Otago, down 16.2%, and Hawkes Bay, down 13.1%.
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