Home affordability up in River City

Whether you are a first-home buyer or a current owner, buying a home in Wanganui continues to be more attractive than in most places around the country, according to the latest Roost home affordability report.

The Roost report for February shows median houses prices in Wanganui had dropped $7750 - or 4 per cent - to $162,000 from January to February this year. That represents a drop of 6.8 per cent from February last year.

Roost said it now takes about 27 per cent of a median income to keep up the mortgage payments on a $167,000 home in the River City, assuming the buyers had a 20 per cent deposit.

Another positive is the median take-home pay for a typical buyer, which was $698 in February, ahead of the take-home pay 12 months ago of $680.

On these figures, Roost says this median income is not high enough to a buy a median-priced home in Wanganui, even with that fifth deposit.

However, there are homes in the lower price bracket that could be considered, and when both adults in the household are working, those median-priced properties shift back into the frame.

Roost said household income remained a key criterion for lending institutions and, based on its standard Wanganui household profile, it would take 17.3 per cent of the median take-home pay to maintain mortgage repayments on a $167,000 home in Wanganui.

This represents a drop of almost 1 per cent on January. Five years ago it took nearly 30 per cent of a median income to cover those repayments.

And for first-home buyers the story is similar, even though that group of potential buyers would be looking at cheaper homes.

Roost said the median weekly after-tax income for a first-home buyer was $647 in February. Again, if both adults in that sort of household hold down jobs, then it will take 11.9 per cent of the median income to service the mortgage.

For standard household buyers, Roost assumes the adult man works full-time, while the woman works part-time and that they have a 5-year-old child. In the case of the first-home buyers, it profiles the home as having a man and woman both working full-time and with no dependents.

Colleen Dennehy, a spokesperson for Roost, said another bonus for buyers was driven by the "intense competition" between the banks.

While affordability got tougher in some parts of the country, in Wanganui and South Auckland affordability improved.

In nearly every other major centre, home loan affordability reached close to its worst levels in the past two years, driven by national median house prices surging to a near-record high.

A slight drop in some interest rates and a marginal rise in incomes were not enough to offset the rise in house prices.