Wanganui still tops for home buyers

Wanganui remains one of the country's best places to live, according to the latest home loan affordability index.
The index, compiled by Auckland-based company Roost Mortgage Brokers, rates Wanganui third, just fractionally behind Timaru and Palmerston North.
The survey matches August to July and shows that it now takes 42.5 per cent of a median household income in Wanganui to pay the mortgage on a median priced house.
In this case a "typical" buyer is assumed to be in the 30-34 age group in a household where one male adult is working full-time, an adult female is working 20 hours a week, and they have one child aged five years.
But even though "affordability" in Wanganui is considerably lower than some other centres, such as Auckland, Queenstown, Tauranga and Wellington, that 42.5 per cent is still above the margin considered to be affordable (40 per cent).
Margaret Smith, a spokeswoman for Roost, said that a year ago the district's affordability index stood at 34.9 per cent and 35 per cent five years ago.
In August the median house price in Wanganui was $215,000, which was a $15,000 increase from the previous month. With the median house price at $178,000 a year ago, that translated to an annual growth of 20.8 per cent. Five years ago the median price was $135,000.
Ms Smith said another influencing factor was the number of sales. Last month there were 25, down two from July and well below the 46 sales recorded in August last year. Five years ago at this time there were almost 100 sales recorded in August.
She said their survey established the median take-home pay in Wanganui in August was $646.29, fractionally up on the same period last year. But while take-home pay was well ahead of the same month five years ago - when it was $530.68 - the matter of housing affordability becomes clearer.
She said a "standard" house buyer was one who already accumulated a 20 per cent deposit. Based on current income and house prices here it would take an individual six years to save the 20 per cent deposit most banks demand before lending.
Ms Smith said tax cuts that came into effect yesterday might improve home loan affordability but there was no evidence home buyers were preparing to take advantage of them.
Roost also calculated that disposable income - wages minus mortgage payments - had fallen from July to August too, dropping $27 to $371. A year ago median disposable income was $413.
Ms Smith said part of the reason was interest rates. While they had fallen slightly from July to August, they remained higher than 12 months ago.
"The average bank interest rate on a two-year fixed rate mortgage was 6.79 per cent for August, 29 base points higher than the 6.50 per cent 12 months earlier," she said.
There is some good news. If both adults work, then median priced housing is much more affordable.
"Based on our current standard household profile, it now takes 29.2 per cent of the median take-home pay to service a mortgage of a median home purchased in August, which is up just over 4 per cent from July.
"A year ago it was 22.7 per cent and 23.3 per cent five years before," she said.
 
THE NUMBERS
$215,000 - The median house price in Wanganui  for August.
$646.29 - Median take home pay
42.5 per cent - How much of the median income it would take to pay the mortgage on a median-priced house.

KEY INFORMATION
Household affordability is calculated using household income of a "standard buyer", which includes one full-time male median income, half of a female median income, with both adults in the 30-34 age bracket, plus Working for Families support they are entitled to receive.
Home loans assumes mortgage repayments are based on the value of the home loan, paid weekly for 25 years, using the two-year bank average interest rates. The loan is assumed to be a standard table mortgage, where both interest and principal are repaid in a fixed weekly payment.