Home Loans Becoming More Affordable for First Home Buyers
Navigating the housing market as a first home buyer in Queenstown can admittedly be a bit of a challenge, but recent trends show a glimmer of hope. With mortgage payments slowly becoming more manageable, the dream of owning a home is becoming a reality for many.
Interest.co.nz monitors the mortgage payments for homes purchased at the REINZ’s lower quartile selling price across major urban areas. They then compare these payments to the median after-tax wages of 25-29-year-old couples. When mortgage payments exceed 40% of after-tax income, they are considered “unaffordable”.
The latest data reveals a positive trend: the percentage of a typical first home buyer's take-home pay required for mortgage payments on a home purchased at the national lower quartile price with a 10% deposit has been decreasing. From March to June, this percentage dropped from 43.8% to 41.9%.
While home ownership for first home buyers was firmly in the unaffordable zone earlier this year, it has now moved to just slightly unaffordable. If this trend continues, we could see affordability at the national level fall below the 40% threshold by the fourth quarter of this year.
It’s important to note that buying a property with a mortgage percentage over 40% is still absolutely do-able through careful planning and budgeting, this is just the guideline that is put in place to monitor how mortgage repayments stack up against the average income. Buying in Queenstown also means that, due to the higher home prices, the mortgage repayments as a percentage of income could still be above 40% in some areas. However, for first home buyers, both locally and nationally, things are moving in the right direction.
In addition to this, the average home price is starting to flatten or drop slightly, making the average home more affordable. Interest rates are slowly beginning to fall, with many predicting them to continue to fall towards the end of 2024 and into 2025. This drop in interest rates means that weekly mortgage repayments are becoming less and therefore more affordable for first home buyers.
The average Kiwi also now has more money in their pocket. The minimum wage has risen, and tax cuts have meant that most people are slightly better off financially. These factors combined are contributing to an environment where first home buyers in Queenstown are having an increasingly better chance of entering the housing market.
If you are looking to buy your first home and want to discuss how the current market conditions might impact you, then get in touch. Our team of Queenstown mortgage advisors are all locals and understand the unique conditions in the region. Get in touch with us on 03 441 1307 or click the ‘contact us’ tab at the top of the page, fill in the form, and we'll be in touch.