It's a great time to buy a house

3:00 pm - By ANNE GIBSON property editor

Houses are now more affordable than they have been in three years because wages are rising, interest rates are falling and house prices are staying stable, according to a report released today.

The AMP home affordability index has shown the highest quarterly improvement in the past three years, rising 13.3 per cent for the December quarter.

The result is the lowest index figure since December 1999, when the index stood at an indicator of 17.20, but it has now fallen to 16.8. The index stood at 19.38 in the quarter to September last year.

Residential property is continuing to rocket ahead with a 33 per cent increase in the number of houses sold last month resulting in a three-year high in volume, according to separate figures released today by the Real Estate Institute.

The December sales figures showed that 6147 properties were sold last month, compared to just 4611 in December 2000, and that sales cracked the billion-dollar mark, rising from $900 million in December 2000 to a record $1.3 billion in December last year.

But the soaring sales were not the only good news.

People's ability to fund houses is also improving, according to AMP's survey of home affordability.

The survey is prepared by Massey University's real estate analysis unit and combines data on housing prices, mortgage interest rates and average weekly earnings to produce a home mortgage affordability index indicator.

Noel Kirkwood, AMP Banking's operations manager, today said the residential market was performing extremely well.

"Now is a great time to buy, given those three key factors of interest rates, wages and stable house prices," he said, but added that it all depended on which area people lived in and their personal financial circumstances.

Rex Hadley, president of the Real Estate Institute, described the December figures yesterday as "stunning" and added that they were a three-year high.

"Sales in December 2001 are the highest since December 1998, when 6192 properties changed hands," he said.

The total value of sales nationwide also improved, from $936 million in December 2000 to $1.3 billion in December last year, he said.

The national median house price was up $8000 to $178,000 for December last year, compared to $170,000 in December 2000.

AMP cited further interest rate cuts and wage improvements during the past five consecutive quarterly periods as part of the reason behind the affordability index changing, with a low index indicating improved affordability.

Southland and Otago are the two most affordable regions in New Zealand, AMP said.

Mr Graham Crews, a senior real estate lecturer at Massey University's Albany campus said today that the December figures were particularly strong, as the Christmas month was normally quiet for property deals.

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