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Home affordability is at its best in four years but getting a home loan approved may be harder.
The Home Loan Affordability report by financial information website www.interest.co.nz shows houses are the most affordable they have been in four years.
The improvement has been 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% on December 4.
A 3% fall in the median house price to NZ$328,500 has also added to the improvement created by a 41 basis point fall in the average 2-year fixed mortgage rate to 7.07%.
The biggest improvements in affordability were in Nelson/Marlborough and the Central Otago/Queenstown Lakes regions, where median house prices fell 11% and 10% respectively.
Interest.co.nz editor Bernard Hickey believes that if the current rate of improvement continues, housing will be broadly affordable for many home buyers by mid to late 2009.
However, Hickey says mortgages are not as available as banks tighten their purse strings during the recession.
"Rationing of credit by banks and demands for higher deposits may constrain a rebound any housing market volumes and prices, keeping affordable housing out of the reach of buyers with only small deposits," he says.
And, Hickey says people are more cautious about home buying because of job security concerns.
The Reserve Bank of New Zealand is widely expected to cut the Official Cash Rate by a further 100 basis points to 4% next Thursday.
Many economists expect further cuts through the first half of
2009 to a low of 3% to 3.5%, creating the potential for variable
mortgage rates to fall to 5.5% to 6%.
