New Zealand housing affordability was at its best level in four years in December thanks to cheaper mortgage rates and lower prices, a report showed on Wednesday.
An average-income home buyer needed to commit 59.6 percent of post-tax income to service a mortgage on a median-priced house for the month, down from 63.8 percent in November, the lowest level since January 2005, financial Web site www.interest.co.nz said in its home affordability report. "At the current rate of improvement housing would be broadly affordable for many home buyers by mid to late 2009," the Web site's editor Bernard Hickey said.
The Reserve Bank of New Zealand has cut its benchmark interest rate by 3.25 percentage points since July and economists in a Reuters poll expect the central bank to cut a further 1 percentage point next week. Mortgage rates have been cut by home lenders in the wake of the RBNZ's aggressive easing.
Around 80 percent of all New Zealand home loans are fixed, with around a third of mortgages expected to come up for renewal over the next 12 months. However, lenders now generally require borrowers to pay bigger deposits for properties before agreeing to lend because of tighter credit conditions amid the global financial crisis.
New Zealand's once-hot housing market cooled off rapidly last year as the economy slipped into recession and soaring food and energy costs sapped consumer spending power. Data last week from both a government agency and real estate industry group showed national median house prices in November were up to 7.4 percent lower on a year earlier.