25 Feb 2014

Good news for home buyers

7:52 pm on 25 February 2014

Home affordability in New Zealand is at its best level in months, according to a mortgage broker's report.


Photo: RNZ

The Roost Home Loan Affordability report says the Reserve Bank's lending limits have driven down prices in the hottest markets.

Loan-to-value ratio rules introduced by the Reserve Bank in 2013 mean no more than a tenth of a retail bank's mortgage lending can be to people with deposits under 20 percent.

The affordability report says sales and median prices fell in the biggest cities in January this year - the fourth month since the restrictions on mortgage lending were introduced.

It says first home affordability is at its best level since August last year and has been helped by a slight lift in earnings.

The most affordable place to buy a home for first home buyers is Whanganui, while Auckland's North Shore is the least affordable.

But another mortgage broker says the fall is only temporary. Loanmarket director Bruce Patten said he expects house prices will rise again and changes to lending rules won't bring prices down, but will push interest rates up.