Affordable Housing

A few years back the squealing broken-arsed pinkos were moaning like hell about affordable housing. They wanted all sorts of regulations, rules and legislation to be passed to require affordable housing. Well as is usual the market has delivered rather than the politicians.

Houses are at their most affordable levels in seven years, with falling prices, interest rates at record lows and banks more willing to lend, according to a monthly report into affordability.

The Roost Home Loan Affordability report, released today, shows home loan affordability in May was at its best levels since April 2004.

The report measures affordability for individual income earners and households, based on median house prices, interest rates and incomes. Affordability has been improving since December 2009.

The national median house price fell from $360,000 in April to $350,000 in May. It was a record high of $365,000 in March.

In May, affordability improved in most cities and provincial areas, including central Auckland, Wellington, Hamilton and New Plymouth, because of a drop in median house prices.

There you go. Affordable housing.

My mate has always thought house were affordable, he has about 30 of them, and doesn’t seem to have a problem affording whatever house he wants to buy.



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  • spudze

    Affordable for the time being perhaps. Made affordable because of the lowest interest rates in a generation in the middle of a global financial crisis. House prices have barely moved. Salaries have barely moved. Interest rates have plunged. Interest rates can double much faster than salaries and house prices. When interest rates do increase then we will have severely unaffordable houses again.

    When considering affordability fundamentally it is the relationship between income and prices that are more important rather than mercurial interest rates. In the end I guess its a case of pick your favourite metric but in terms of income multiples at least housing is still seriously unaffordable.

    • adolffiinkensein

      spudze – you are talking nonsense, as is Labour.

      In 1986 I bought my first house in NZ and I paid $162k while my salary was $45k. I was an executive responsible for some twenty staff with a fully maintained company car available for unlimited private use. So, the house cost just under four times salary.

      Today, the same executive on $150k per year plus a car and subsidised super would buy a similar house for three times salary and perks.

    • gazzaw

      Same reply from me as you got from adolf. Buying a house has never been easy, the only problem is that you and your generation aren’t prepared to go without your toys while you deal to the mortgage.

  • spudze

    Thanks for the constructive feedback guys. Great to to see that quality thoughtful debate is not dead …

    Adolfx, interesting point you raise re not looking at the average wage and average house price but rather taking your relativity from job descriptions. I have no idea whether it holds water but it would be interesting to see whether people doing a similar job now or at least with similar responsibilities to someone in the mid 80’s would be able to buy the same house with the same income multiple as in the mid ’80’s.

    Gazzaw, not even sure where to start mate?! Just what is my generation? I never mentioned it and you’re bold to assume it. Ditto on the toys! My comment was on the mechanics of determining a metric for ascertaining the relative affordability of housing through time. From that relatively dry post you’ve divined my age and proclivity for toys? On ya mate.

  • spudze, you’re right about at least one thing. The income/price ratio is the standard metric used internationally for measuring affordability. But I’m not sure the measure is the point of the post. And I think Whale is being uncharacteristically mischievous with his commentary. The question is not whether housing is ‘affordable’, it is why housing is ‘unaffordable’.

    The fact is it is government and council intervention (government through Liarbore’s active destruction of anything other than property as an investment vehicle, and councils through moronic urban planning restricting the availability of land).

    People (and the ones who do this are mainly young and stupid) sucked into buying a house they think they can afford when interest rates are at 6% have absolutely no right to squeal when rates hit 10, 12 or 15%. The fact is, owning ones own house is not a ‘right’ as many believe, and housing is not an investment vehicle. People have been suckered by property spruikers selling them the snake oil that property prices never fall, and they believe it because prices have been spiralling upwards for 25 years because of government/council interventions mentioned above, and the credit-fuelled bubble caused by banks borrowing at historically low rates and lending to people who, in a normal cycle, would never be able to afford their own home.

    The discussion is (or ought to be) not whether housing is affordable, but what happens when the price bubble bursts and the market corrects itself (as it surely must, unless retail banks keep inflating the bubble and central banks keep printing money)? As there is no other effective investment vehicle in NZ (see the stock market lately?) it could easily cause not just a double-dip recession, but a full-blown depression. And then sit back and watch the fun begin!

  • spudze

    Preaching to the choir Gantt Guy.
    I used to think that there would be a big drop in property values after ’07. But to tell you the truth, if the best 3 years of a GFC second only to the depression can do is, roughly speaking, flatline prices I’ve just got to wonder. Given the flickers of life apparant now in the Auckland property market I wonder if the most likely outcome is flat to marginally reduced prices for a good way out into the foreseeable future for most places and for a few select markets prices continuing to go up due to demographics and council planning factors.