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Thread: Home affordability getting easier

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    Default Home affordability getting easier

    Home affordability getting easier - report
    3:00PM Wednesday June 18, 2008

    Lower interest rates and flat house prices helped housing affordability improve to its best level in more than a year, according to a new report.

    Housing was more affordable than at any time since March last year and set to improve through the rest of 2008 as interest rates and house prices fall, interest.co.nz, which prepared the report, said today.

    Upcoming tax cuts were also expected to improve affordability ratios as take-home pay rose slightly for most home-buyers.

    In May, the average homebuyer needed to spend 80.6 per cent of take-home pay from a single median income to afford the mortgage on a median-priced house.

    That was down from 82.2 per cent in April and 81.1 per cent a year ago. It was the first time in five years that houses had become more affordable than one year earlier.

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    Property keeps falling - June prices down 2pc
    Page 1 of 2 ...... Updated 2:00PM Friday July 11, 2008

    The winter housing slump is showing no sign of abating, with median prices falling by 2.15 per cent in June - from $345,000 in May to $340,000 accordng to official numbers released today by the Real Estate Institute.

    This latest fall follows on from last month's drop of 1.42 per cent.

    The biggest June house prices declines were seen in Manawatu and Wanganui - both down nearly 14 per cent.

    ASB economist Nick Tuffley said the slowdown in the housing market was continuing, judging by the price and days to sell performance. However, house sales had stabilised after their considerable tumble earlier in the year.

    "We expect continued weakness in the housing market. To date sales turnover has borne the brunt of the adjustment. Going forward we would anticipate that weaker prices will pick up some of the adjustment process and that sales turnover will not weaken to the same extent."

    Tuffley said that given the glut of listings on the market the median price "appears to be holding up comparatively well."

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    Record rise in NZ home affordability - new report
    12:00PM Friday July 18, 2008

    Falling house prices, coupled with lower interest rates have driven the biggest improvement in home affordability in the past six years.

    The Wizard Home Loans Affordability report was released today, showing June's improvement was the biggest seen since it began in 2002. Home affordability is now the best since February last year.

    This monthly report measures the proportion of a median after tax income needed in each part of New Zealand to service an 80 per cent mortgage on the median house price in that region.

    Last month it took 78.5 per cent of the median take-home pay to service the mortgage on the median house in June, down from 80.6 per cent in May and down from a peak of 83.8 per cent in November last year.

    The previous best level of affordability was in February last year when the affordability ratio stood at 74.7 per cent.

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    Property plunge: even worse than you thought
    By GREG NINNESS and EMMA PAGE - Sunday Star Times | Sunday, 20 July 2008

    House prices are falling more steeply than official figures suggest, sending household wealth tumbling and curbing consumer spending.

    Two weeks ago, the Real Estate Institute said house prices had fallen just 2 per cent, but Sunday Star-Times analysis shows the fall is much bigger. And the outlook is grim - one economic pundit predicts a 30 per cent drop in prices, and says the heights of November 2007 will not be seen again for 10 years.

    But the news isn't bad for everyone - houses are now the most affordable since February 2007, and lower house prices and reduced consumer spending could see interest rates drop. Some commentators, though, believe the Reserve Bank will leave the official cash rate unchanged on Thursday because of concerns about rising inflation.

    Star-Times analysis shows that in recent months, prices fell most in Southland, Taranaki, Wellington and Manawatu/Wanganui.

    The only two regions where house prices rose were Central Otago/Lakes and Nelson/Marlborough.

    The Star-Times compared median house prices at the market peak last November with those of June this year. The analysis shows that since November, the national median has fallen $12,000, a drop of 3.4 per cent - equivalent to an annual drop of nearly 6 per cent.

    This decrease is much larger than figures recently released suggest.

    Last week Quotable Value said residential property prices in the three months to June were 0.1 per cent higher than for the same period last year, and two weeks ago the Real Estate Institute said the national median price in June was just 2.15 per cent lower than June last year.

    While their figures are correct, there were another five months of house price growth after June 2007, meaning the dramatic falls have come only after the market peaked.

    Last November, the median price hit $352,000. By June this year, that had fallen to $340,000.

    During that time Wellington house prices fell 13.5 per cent, Southland's 12.7 per cent, Taranaki's 7.3 per cent and Christchurch and Dunedin both by around 4 per cent.

    Only Central Otago/Lakes (up 19.8 per cent) and Nelson/Marlborough (up 0.6 per cent) were in positive territory.

    Experts say the economic uncertainty caused by the falling property market and higher food and petrol prices means people will save rather than spend.

    Retail sales fell 1.2 per cent, or $69 million, in May, the biggest drop since a 1.9 per cent fall in February 2004.

    BNZ chief economist Tony Alexander expects house prices will fall at least another 5 per cent and doesn't expect them to pick up until 2010-11.

    He said first-home buyers were the biggest winners in the falling market, and that lower spending could reduce interest rates.

    But Bernard Hickey, managing editor of interest.co.nz, is predicting the gloomier times will last much longer. He says house prices will drop 30 per cent over the next two years as the foreign capital which funded the housing boom dries up, and that it will take 10 years before prices get back to the November 2007 peak.

    Hickey said housing affordability was at its best level since February 2007. The Wizard Home Loans Affordability report shows it now takes 78.5 per cent of the median take-home pay to service the mortgage of a median house, down 5 per cent from a peak of 83.8 per cent last November.

    Falling house prices would also curb spending. "This is the hangover we had to have after the debt-fuelled spending binge and we don't have any Panadol to make it go away."

    Hickey said the Reserve Bank was being prudent, and had told the main banks to include the potential for a 30% fall in house prices in their risk modelling. If prices do fall that much, home owners with 80% plus mortgages could be in negative equity. Around one-fifth of all mortgages have loan to value ratios of 80% or more.

    The head of TradeMe Property, Brendon Skipper, said properties were taking 20 days longer to sell - the average property now stayed on the site for 60 days. The number of listings each month was slowing.

    However, the rental market was "going gangbusters" he said, with the number of properties being listed for rent increasing 38 per cent over the past three months.

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    Buying house 'more than twice as dear as renting'
    5:00AM Tuesday July 22, 2008
    By Simon Collins



    Buying a house is now almost two and a half times as expensive as renting, according to figures to be presented at a seminar today.

    Property Investors Federation vice-president Andrew King says a 25-year mortgage for 90 per cent of the cost of the country's median-priced house, worth $345,000 last month, would currently cost a new home-buyer $745 a week, including rates, maintenance, insurance and an allowance for other costs.

    By contrast, the national median rent last month was only $305 a week.

    He will tell an Australasian Housing Institute seminar on affordable rental housing in Waitakere today that the ratio of mortgage costs to rents is higher in New Zealand than in five similar countries.

    "Right now the gap is enormous, but it's always been there because New Zealanders prefer to own their own property rather than rent, so they are always willing to pay a premium rather than renting," he said yesterday.

    "At the moment a first-home buyer could save more than $20,000 a year and rent for, say, three to five years, then they'll have $60,000 to $100,000 extra to put towards a deposit.

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    Lower interest rates improving home loan affordability
    1:00PM Monday August 18, 2008

    Houses are now the most affordable they have been in 18 months.

    Falling interest rates have improved housing affordability in July to its best level since February 2007, the Wizard Home Loans Affordability report shows.

    The national median house price was steady in July, but prices are falling in most of the big cities.

    Tax cuts on October 1 and further falls in interest rates are expected to improve affordability significantly over the rest of 2008 and through the spring when many home sellers put their houses on the market.

    This monthly report measures the proportion of a median after tax income needed in each part of New Zealand to service an 80 per cent mortgage on the median house price in that region.

    The home loans affordability report shows it took 77.4 per cent of the median take-home pay to service the mortgage on the median house in July, down from 78.3 per cent in June and down from a peak of 83.8 per cent in November last year.

    Affordability is now back near the levels it was at in February last year and not far off its levels of 70 per cent seen in the spring of 2006.

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    House prices tumble 7 per cent in 7 months
    5:00AM Tuesday Sep 09, 2008


    Chart supplied by interest.co.nz

    Residential property prices dropped almost 7 per cent from their peak in January and are expected to decline further, says a report from government owned valuer Quotable Value (QV).

    Property values for the three months ended August 2008 declined by 4.5 per cent from a year ago, with noticeable declines in the main centres.

    Average Auckland residential property values fell 5.8 per cent since August last year, with Hamilton values falling 8.5 per cent, Wellington by 2.9 per cent, Christchurch by 5.8 per cent and Dunedin by 7.8 per cent

    "Property values continue to fall across the country with all main and provincial centres now showing values lower than they were 12 months ago," said Blue Hancock of QV Valuations.

    The increase in properties available to rent had an impact on investment returns. "Across the country investment returns are being impacted by an increase in properties available for rent, higher mortgage payments, and an outlook of minimal capital growth," Hancock said.

    QV said that there were early indications of a positive mood from buyers.

    "Many buyers are realising that price decreases are making this a good time to buy, and that they can bargain strongly. As a result there will be further declines in value before the market levels out," said Hancock.

    It also said that some investors seem to be re-entering the market, especially in Auckland and Wellington.

    In Auckland, "indications are that the declines in the apartment market are easing, with buyer interest perhaps sparked by greater affordability," said QV's Glenda Whitehead.

    In Wellington, "the QV statistics show a persistent decline in values that we expect to continue for the next few months. Some buyers are being attracted by the lower prices and some of the older stock is starting to sell. If this trend continues we can expect to see volumes begin to increase and the market may gradually return to more normal levels of activity, but without the property price rises of the past few years," QV's Max Meyers said.

    Southland saw the biggest increase in value growth from a year ago in all 92 regions surveyed. For the three months ended August 2008, values increased by 11 per cent from August 2007, but prices were down 0.1 per cent in Invercargill from a year ago.

    Gisborne saw the biggest fall in values, down 10.4 per cent for the three months ended August 2008 from a year ago.

    - INTEREST.CO.NZ

    From here.
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