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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