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Housing is still unaffordable for first home buyers on average incomes but at least it's not getting any worse



By Greg Ninness

Housing affordability appears to be in a period of relative stability for first home buyers, with only slight changes in the main drivers of affordability, according to's latest Home Loan Affordability Report.

There have been small monthly movements in the Real Estate Institute of New Zealand's lower quartile house price, but it has remained within the fairly narrow range of $570,000 to $600,000 since March last year.

That's still well down form the peak of $670,000 achieved in November 2021, but for the time being at least it appears prices at the bottom of the market are relatively stable.

Mortgage interest rates are also showing only small, incremental changes, with the average of the two year fixed rates charged by the main banks declining from a recent peak of 7.04% in November last year, to 6.74% in May this year, putting it back where it was in July last year.

That means mortgage payments on a home purchased at the REINZ's lower quartile price with a 10% deposit have increased by a mere $13 a week over the last year, from $873 a week in June last year to $886 in May this year.

If the same home was purchased with a 20% deposit, the difference in mortgage payments over the last 12 months would be just $11 a week, rising from $688 in June last year to $699 in May this year.

The one area which has shown some significant movement over the last year or so is after-tax income, which has risen relatively strongly. estimates the median after-tax pay for couples aged 25-29 who were both working full time was increasing steadily by about $10 a month throughout 2022 and 2023, but slowed to an average of just a couple of dollars a month this year.

The means the average estimated take home pay for typical first home buyers increased from $2002 a week for a couple in May last year, the first time it has risen above $2000, to $2087 in May this year, which would have helped with mortgage affordability.

However most of that increase in after-tax pay occurred last year and incomes are now also flattening out.

What all of this suggests is we are in a period of relative stability in terms of affordability for first home buyers. So those who can afford to buy are unlikely to be disadvantaged by taking their time to find the property best suiting their needs.

However, those who can afford to buy their own own home will probably be highly paid, because home ownership remains unaffordable for aspiring first home buyers on average pay in most parts of the country. But at least it's not getting any worse.

The tables below give the main affordability measures for first home buyers with either a 10% or 20% deposit, in most of the main urban areas around the country.





This story was originally published on and has been republished here with permission.