By KIDSON Sally
The Nelson-Marlborough region recorded the biggest increase in home affordability in the country for December, after median house prices fell 11 per cent.
However, despite houses being the most affordable in the region since June 2005, house prices in the lower quarter of the market are still out of reach for first-home buyers on one median income, even with a 10 per cent deposit.
However, a couple with more than one income may find the price affordable.
This is the conclusion of the December home loan affordability report from financial information website www.interest.co.nz, which puts the increase in affordability down to the housing market slump and the fall in fixed mortgage rates.
In the Nelson Marlborough region, it now takes 60.1 per cent of one median income in the 25-29 age group to buy a house, down from 64.0 per cent in November and 89.9 per cent last February.
The proportion of after-tax income considered prudent to sustainably make payments on a house is about 40 per cent.
The lower-quartile house price in the region was $257,000 in December, down from $270,000 in December 2008.
The median weekly take-home pay for a first-home buyer was $626.46 in December, up from $584.95 in December 2007.
Nationally, homes are the most affordable they have been in four years, but are still unaffordable for many, with credit rationing by banks not helping.
Nationally, in December it took 59.6 per cent of an after-tax median income to service a mortgage, down from 63.8 per cent in November.
This was the first improvement to below 60 per cent for a typical home buyer since January 2005 and well below the record worst level of 82.9 per cent in November 2007.
At current rates of improvement, housing is likely to be broadly affordable again for most home buyers towards the end of 2009.
The improvement in December was driven largely by lower interest rates in the wake of the Reserve Bank's 150 basis point cut in the official cash rate to 5 percent on December 4.
It is widely expected the Reserve Bank will cut interest rates to 4 per cent on January 29.
Originally published by KIDSON Sally NZPA.
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