New research shows it now takes two average incomes to pay off a standard mortgage in New Zealand.
A survey by the website interest.co.nz tracks home loan affordability against a scale in which 40% of total household income goes on paying the mortgage.
As house prices rise, people need bigger mortgages, and as interest rates rise, the mortgage payments become greater.
The combined effect of these two factors looks scary for first home owners.
In April 2002, a couple needed 1.2 average incomes to stay on
that 40% ratio, by April last year it was 1.7 average incomes and
today it is a full two incomes. This is the first time ever that
the level of two full incomes has been breached.
Home loan affordability is falling faster than ever, the
affordability report says. In the last three months you needed 8.6%
more income to avoid being worse off. In the past 12 months, you
needed 16.3% more income.
"Clearly the affordability squeeze has gotten dramatically worse -
effectively shutting out most first-home buyers from many parts of
the country," the report says.
The least affordable regions are Central Otago Lakes,
Auckland and Northland, while the most affordable regions are
Southland, Otago and Manawatu/Wanganui.
Wages are not keeping up with house prices. Weekly take-home pay rose by about $30 in the last year but mortgage repayments for a median priced house increased by $105.
