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Fairfax Media home loan affordability

Tuesday, 28 August 2007, 1:36 pm
Press Release: Fairfax Media

Media release by www.interest.co.nz

28 August 2007 – embargoed until 1:00 pm

July 2007

This monthly series is designed to measure how much of an average weekly take-home pay is required to make a standard mortgage repayment for an average house.

As at the end of July 2007, the national average was 80.8%, down marginally from June 2007 (81.5%), but up much more dramatically from July 2006 (69.8%).

That is, it now takes at least 80.8% of the average take-home pay to afford a standard mortgage payment of a median-priced house, as at July 2007.

In July 2002, five years ago, it took only 44.8% of take-home pay to make a mortgage payment on a median house.

The full Report is now available at www.interest.co.nz and it is supported with twelve separate regional reports.

Special focus on First Home Buyers

A new extension released this month is the Fairfax Media first home buyer home loan affordability series.

This tracks the affordability for home buyers in the 25 to 29 age range who are buying a house in the lower quartile. Lower quartile house sales data is supplied by REINZ. The ability of these buyers to save a deposit varies by region, and this variable factor is accounted for in this new series.

The first-home-buyer series Report is also available at www.interest.co.nz, and it is also supported with twelve separate regional reports.

This new data shows that first home buyers are not only facing high interest rates, but also house prices in the lower quartile that are rising faster than median house prices, and they also face competition from other standard buyers who can no longer afford a median-priced house.

Despite severe affordability issues in most regions of New Zealand, there are still some areas where housing is affordable. That is, where the mortgage payments on a house purchased in July 2007 do not exceed 40% of take-home pay.

The methodology and data sources are set out for both series on the website.

ends

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