Homes affordable but buyers still wary

by CATHERINE HARRIS stuff.co.nz 24/03/11

Home affordability has improved to its best level in seven years but buyers are still wary of returning to the market.

Falling or flat house prices and a large cut in floating mortgage rates as a result of the February 22 earthquake had given home buyers’ buying power a real boost, the Roost Home Loan Affordability report said.

“The ongoing benefits of last year’s income tax cuts for those on higher incomes boosted affordability to its best levels since March 2004, which was just before house prices surged,” Roost’s Rhonda Maxwell said.

The report said that in February, it took 54 per cent of a single median income to pay the mortgage on a median-priced house with an 80 per cent mortgage.

It revised that figure to 51.7 per cent after the Reserve Bank cut the official cash rate by half a percentage point on March 10.

Those in the first-home-buyers market, usually young couples with a double income and no children, enjoyed an affordability rate of 21.6 per cent of their income in February – a level not seen since the middle of the decade, Ms Maxwell said.

Despite this, buyers were not leaping to buy, said John Ross, owner of Wellington real estate firm Oxygen.

“I think it’s just that people don’t have confidence in the wider economy.” ….

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Posted in News & Articles | 2 Replies

2 thoughts on “Homes affordable but buyers still wary

  1. A different story on the other side of the Tasman — according to the this …

    Aussie first-home buyers priced out of market

    SIMON JOHANSON stuff.co.nz

    Australia faces a prolonged housing affordability crisis with the last bastion of cheap housing – new suburbs on city fringes – moving out of reach of most first-home buyers, research shows.

    At the end of last year, three out of 10 lots for sale in new housing estates were accessible to average-income first-home buyers, a study of unpublished data from the National Land Survey Program has found.

    City fringe subdivisions once provided first-home buyers with prized house and land deals at prices most could afford.

    But in Sydney only one out of 10 lots is sold under an industry-accepted affordable land benchmark of A$200,000 a lot. And the research has found that situation has existed since at least June 2008.

    The loss of affordability has been pronounced in Melbourne as well, with 26 per cent of lot sales meeting the affordability benchmark, down from 90 per cent two years ago, one of the study’s authors, Colin Keane, said.

    South-east Queensland had worse affordability than Melbourne, while Adelaide (75 per cent of lot sales meeting the affordability benchmark) and Perth (40 per cent) were the only major capitals building enough affordable housing in new estates.

    ”Everybody knows that established housing is beyond most first-home buyers … That’s a problem that is now extending to the greenfield frontier as well,” said Bob Birrell, a co-author and Monash University population expert.

    Developers have repeatedly blamed soaring prices on dwindling land supply, calling for more rural land to be rezoned for housing and faster planning processes for new estates.

    Read on at stuff.co.nz

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