Increased affordability is good news for first home buyers.
It is the third consecutive quarter that home affordability has improved in 2024, following a decline in quarter four of 2023. The improvement this quarter, which tracks affordability from May to August, was broadly driven by a decrease in mortgage interest rates, a slight increase in income and an overall decline in the median house prices in majority of the regions, including Auckland.
Interest rates have decreased this quarter, by 0.23 per cent to 7.15 per cent as at July 2024. This is a return to the medium-term trend of decreasing interest rates, after their increase during the last three years by the Reserve Bank.
Incomes have increased slightly, by 0.70 per cent this quarter, with more than half of the regions showing an increasing trend in average weekly earnings. The national house price to income ration this quarter is now at 9.8 times of annual wages. The largest changes in income were recorded in the Hawke’s Bay region, at a 2.8 per cent increase.
The report shows that the median house price has decreased in 11 regions, with the greatest decrease being in the West Coast region, where it decreased by 11.9 per cent or $48,000. At the national level, overall median house prices decreased by 0.60 per cent, or $5000 this quarter.
Overall housing affordability has improved this quarter by 4.4 per cent nationally, with 15 regions seeing improved affordability and only one, Gisborne, showing decreased affordability. The most significant change this quarter has been seen in the West Coast region, where housing affordability has risen by 16.2 per cent.
Report author Dr Arshad Javed from the Massey University Real Estate Analysis Unit (REAU) says, “These latest results have fed into the 0.3 per cent decrease in median house prices we’ve seen overall this year. A national increase in earnings and decrease in mortgage interest rates has improved the overall affordability this year.
"Currently it is a buyers' market and a right time for first home buyers to get on the property ladder."
Read the full September 2024 Home Affordability Report here.
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