Buying a home is easier now than 20 years ago, despite the recent housing boom, a Treasury working paper has found.
The paper, which looked at housing affordability over the past two decades, said buying a first home was less difficult today than in 1986 -- when interest rates peaked
at 20 per cent -- but just as difficult now as in 1996.
Unlike in the mid-1980s, home owners can now manage the effect of interest rate hikes by fixing their mortgages for periods of one to five years.
Treasury said housing affordability went in cycles, and was linked to incomes, interest rates and house prices.
The paper found no link between Government housing policies and affordability.
In Australia, home buyers receive a government grant to help them into their first home.
The working paper contrasted with recent surveys by AMP and international consultancy, Demographia.
AMP's latest Home Affordability Report showed a national decline in affordability of 4.8 per cent in the December quarter, the seventh consecutive monthly fall. Rising house prices were the main driver.
A January survey by Demographia rated housing costs in the country's three main metropolitan areas, Auckland, Wellington and Christchurch, as "severely unaffordable".
The Treasury paper's authors, Mark Robinson, Grant M Scobie and Brian Hallinan, said affordability was a difficult concept to define.
The working paper was based on Statistics New Zealand's Household Economic Survey.
The data revealed no long-term affordability trend, but indicated that affordability moved in cycles - corresponding with interest rate and house price movements.
Howard Morley, president of the Real Estate Institute, told Radio New Zealand the paper's finding did not come as a surprise.
- NZPA
