First homebuyers of Auckland at an advantage by $87 per week compared to 18 months back.
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Decreasing mortgage interest rates, marginally low house prices and gently increasing wages all are assisting in the dream of Auckland’s first home buyers.
According to the Home Loan Affordability Report of Interest.co.nz for the month of September, calculates that mortgage payments for a lower quartile priced home in Auckland would consume 41.8% of a common first home purchasing couple’s take home pay every week. This is still studied unaffordable but is well below than where it was in the month of March 2017. At that time the mortgage payments for a lower quartile-priced home would consume up 46.1% of a common first home buying couple’s take home pay.
Three factors have helped together in improving the affordability for Auckland’s first home buyers.
- Interest Rates for Mortgage are down:-Major banks have dropped the average of two year fixed rates from 4.84% in March last year to 4.51% in September this year. That would eventually decrease the payments on a $500,000 mortgage from $608na week to $585 a week, helping the borrower by $23 per week.
- House prices have eased:- In the month of March 2017 the selling price for REINZ lower quartile in Auckland was $680,000 but in September 2018 it was $657,000, making the lower quartile-priced home $23,000 cheaper. The lower quartile price is the price point where 75% of sales in each month would be above that point and 25% would be below, reflecting sales at the bottom quarter in the market where the first home buyers are most active.
- Gradual increment in Incomes: –In March 2017 the combined standard after paying the tax of an Auckland couple aged between 25-29 working full time was calculated $1598.04 per week. In September 2018 the numbers have increased to $1628.22 resulting in $30 extra per week.
After taking all the aspects in account, the amount a common first home buyer would require to save to pay the mortgage payments on a lower quartile-prices home has decreased from $737.24 in March last year (46.1% of their take home pay) to $680.34 in September this year (41.8% of their take home pay), helping them by $56.90 per week.
When that is linked with the increment in the take home pay the common first homebuyers are better by $87.08 per week as compared to 18 months back.
That theorizes they might have saved up to 20% of their net income per year for four years to put towards a deposit.
Furthermore, Auckland is not the only region that has improved affordability. Condition in Taranaki has also improved where the mortgage payments on a lower quartile-priced home fell from 18.2% in March 2017 to 14.8% in September this year, and in Canterbury, where it decreased form 21% to 20.1% over the same period.
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Information Retrieved from www.interest.co.nz