Key Facts:

  • BNZ economists expected housing affordability in New Zealand to continue improving due to low interest rates and rising incomes.
  • However, a recent report showed a significant decline in affordability, with housing costs outpacing income growth.
  • The average house price in New Zealand is now 6.6 times the average annual income, compared to the long-term average of 5.8 times income.
  • This decline in affordability could negatively impact first-time buyers and those looking to upgrade their homes.
  • BNZ economists believe that the housing market may cool off in the coming months, which could help improve affordability.

Article Summary:

BNZ economists had anticipated that housing affordability in New Zealand would continue to improve, mainly due to the combination of low interest rates and rising incomes. However, a recent report has shown a significant deterioration in housing affordability, catching economists off guard. The median house price in New Zealand is now 6.6 times the average annual income, compared to the long-term average of 5.8 times income.

This decline in affordability could have negative consequences for first-time buyers and those looking to upgrade their homes. The gap between housing costs and income growth has widened, making it increasingly difficult for buyers to enter the market or move up to larger properties.

Despite this setback, BNZ economists remain optimistic about the future. They anticipate that the housing market may cool off in the coming months, which could help improve affordability. However, it is unclear how long this cooling-off period may last or whether it will be sufficient to counteract the existing affordability challenges.

To read the full article, go to: https://www.interest.co.nz/personal-finance/124121/bnz-economists-had-expected-continued-improvement-housing-affordability-now