Property market report
The national lower quartile house price was $520,000 in October according to the Real Estate Institute of New Zealand (REINZ). This means it has increased by $85,000* (+19.5%) since October last year, and by $157,000 (+43.3%) since October 2017.That’s an average increase of $1000 a week over the last three years for homes at the most affordable end of the market (the lower quartile price is the price point where 75% of sales are above and 25% are below).In Auckland, where prices are the most expensive in the country, the lower quartile price has increased from $654,000 in October 2017 to $769,000 in October this year.That’s an increase of $31,500 over the last 12 months and $115,000 over the last three years.
This means a 10% deposit on a home at the national lower quartile price would have increased from $36,300 in October 2017 to $52,000 in October 2020. The size of the mortgage needed to go with that would have increased from $326,700 to $468,000 over the same period. A 20% deposit for the same property would have increased $72,600 to $104,000 over the same three years, while the size of mortgage to go with that would have increased from $290,400 to $416,000. Those are pretty steep increases, especially when you consider what has happened with wages over the same period.
If you the take the national median rate of pay for couples (male and female) throughout New Zealand aged 25-29, and assume they are working full time, that would give them combined after-tax pay of $1713 a week in October this year. That’s an increase of $34.14 a week (+2.0%) compared to October last year, and an increase of $129.91 a week (+8.2%) compared to October 2017. Over the last three years, the cost of homes in the part of the market likely to be of most interest to first home buyers has increased 43.3%, while the take home pay for typical first home buyers on the median rate of pay has increased by just 8.2.%
That suggests lower quartile house prices have risen at more than five times the rate of after-tax wages for typical first home buyers over the last three years. But to get a complete picture of the pressure faced by first home buyers, we also need to look at what has happened to mortgage interest rates over the same period. In October 2017 the average of the two year fixed mortgage rates offered by the major banks was 4.70%. It fell almost continuously from there to 2.65% in October this year.
Economist signal that over the next 12 months nothing will change in this market however those economists said the market would fall by 15% post Covid 19 so let’s see. Recent sales values are:
Herald Island $1,202,000 to $1,700,000
Hobsonville $520,000 to $1,800,000
Massey $590,000 to $3,380,000
Swanson $775,000 to $1,210,000
Waitakere $880,000 to $1,500,000
West Harbour $845,000 to $2,200,000
Westgate $705,500 to $1,015,000
Whenuapai $798,000 to $1,523,000
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