NZ Housing Affordability Improves In July

Source : The Business Times, August 19, 2008

(WELLINGTON) Housing affordability in New Zealand improved to its best level in 18 months in July, driven by lower interest rates and a cooling property market, a mortgage broker said yesterday.

Buyers' market: Falling interest rates, rising wages and lower tax rates are working in favour of home buyers

Wizard Home Loans said an average homebuyer needed to spend 77.4 per cent of post-tax income to afford a mortgage on a median-priced house last month, from 78.3 per cent in June and its lowest since February 2007.

The position of home buyers was expected to improve through the rest of the year.

'Home buyers are in a much stronger position than they have been for a long time,' John Grant, director of New Zealand business at Wizard Home Loans, said in a statement. 'It is a buyer's market and falling interest rates, rising wages and lower tax rates are all working in favour of home buyers as we head back into summer.'

The Reserve Bank of New Zealand cut interest rates by a quarter point to 8 per cent last month, its first policy easing in five years, and has said it was likely to lower them further to support an economy widely seen in recession.

Hit by record high interest rates and soaring food and energy costs, the once-rampant housing market has been cooling rapidly.

Data from the Real Estate Institute of New Zealand showed last week the national median house price held steady at NZ$340,000 (S$342,250) in July, while sales rebounded from 18-month lows.

A tight labour market, buoyant economy and rising net migration gains saw house prices nearly doubled over the past six years. -- Reuters