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Research reveals bad news for home buyers

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  • Research reveals bad news for home buyers

    Research reveals bad news for home buyers

    By EMMA PAGE - Sunday Star Times Last updated 05:00 17/05/2009
    Home buyers who thought the property market was finally tipping in their favour could be in for a shock as new research reveals affordability may be starting to deteriorate again.
    Home buyers who thought the property market was finally tipping in their favour could be in for a shock as new research reveals affordability may be starting to deteriorate again.
    Latest results from a monthly housing affordability survey by financial website interest.co.nz shows affordability worsened slightly in April after almost of year of steady improvement.
    At the peak of the housing boom in September 2007, high house prices and interest rates pushed the home-ownership dream out of the reach of many. As prices and rates have fallen, affordability has improved dramatically, reaching its best level in five years in February.
    But over March and April, prices have stabilised, and interest rates have lifted slightly too.
    The result, says interest.co.nz editor Bernard Hickey, is "a spanner in the works" for many first-home buyers and rental property investors.
    Hickey says many home buyers jumped into the market in March and April to take advantage of lower interest rates and to look for bargains lifting house sales and stabilising prices. The median house price edged up from $335,000 to $340,000.
    Interest rates also started to climb again with the average two-year rate for April sitting at 6.24% up from 6.07% in March.
    "The improvement in affordability helped fire up the market again in March and April, but this reversal is likely to cause many to think again before diving back into housing," said Hickey.
    The April results show that the median wage earner would now have to earmark 56.2% of their $735.18 weekly take-home pay to service the mortgage on a median-priced house. The calculation assumes a 20% deposit.
    In February the same buyer would have had to dedicate 54.6% of their income to the mortgage.
    Housing is considered to be "affordable" when it claims no more than 40% of net income.
    Affordability also worsened slightly for a typical first-home buyer 25-29, earning median income and buying a lower-quartile priced house. It now takes 48.8% of a typical first-time buyer's income to service a mortgage, up from 47.4% last month.
    www.interest.co.nz


    http://www.nzherald.co.nz/business/n...ectid=10572713
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
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