Half to two-thirds of Aucklanders in the first home-buying age group could still not afford to buy a house even at the "affordable" prices of $500,000 to $600,000 promised in the Labour Party's new housing policy.
Analysis for the Herald by housing researcher Ian Mitchell shows only 43 per cent of Aucklanders in the target 20 to 40 age group could buy a house for $500,000, based on current bank lending criteria.
Only 33 per cent could afford a $600,000 house.
Labour promised on Sunday to build 10,000 extra "affordable" homes a year, half of them in Auckland, at prices of $500,000 to $600,000 for standalone houses and below $500,000 for apartments and townhouses in Auckland, and $300,000 to $500,000 for houses elsewhere.
Property lobby groups have questioned whether that is achievable. Property Council policy director Alex Voutratzis said bare section prices alone "can be well in excess of $500,000" in existing suburbs.
The Herald reported on Sunday that only 79 Auckland houses sold for between $450,000 and $550,000 in the three months to June, just 4.2 per cent of total sales.
The problem is that the median household income for Aucklanders aged 20 to 40 is $93,000, which on Mitchell's figures is enough to buy a $450,000 home - below Labour's "affordable" target for standalone houses.
The figures are not actually much different for the whole working-age group aged 20 to 65. Just over half of that wider age group (52 per cent) could afford a $450,000 home, compared with 49 per cent of the younger 20 to 40 group.
Outside Auckland household incomes are lower, with 54 per cent of the wider age group and 52 per cent of the younger age group reporting incomes above $72,800, which is enough to buy a $350,000 home. But provincial house prices are also lower, so houses are more affordable.
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The calculations are based on home buyers having a deposit of only 10 per cent of a property's value. Although the Reserve Bank requires banks to demand 20 per cent deposits for most mortgages, Auckland mortgage broker Stuart Wills said most first-home buyers were able to get loans with 10 per cent deposits either from uncontrolled non-bank lenders or from the main banks at slightly higher interest rates.
The calculations also assume that banks will not allow a household's total financial commitments to be more than 40 per cent of their gross income, using a "test" interest rate of 7.55 per cent - much higher than current floating mortgage rates of 5.45 to 5.75 per cent.
"The banks always test the borrower at a higher rate," Wills said. "It was 7.25 per cent. It went up and I'm pretty sure it's sitting at 7.55 per cent at the moment."
ANZ, ASB and Westpac banks all confirmed they test borrowers at rates above current lending rates, but the exact test rates were "commercially sensitive".
Labour housing spokesman Phil Twyford said the party assumed most of the "affordable" housing in Auckland would be townhouses and apartments priced below $500,000, rather than standalone houses.
He said it was also unrealistic to use figures starting from age 20 because "25-34 would be more our target audience".
Housing Minister Nick Smith said Massey University's housing affordability index had actually improved over the past year because interest rates were at a 40-year low.