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Housing Market and Finance – Kiwis still spending half of household income on mortgage repayments
Housing affordability in Aotearoa New Zealand has generally been improving as property values fall, incomes rise and interest rates stabilise, however mortgage repayments are still eating up a large proportion of people’s income, according to the latest CoreLogic Housing Affordability Report.
Mortgage repayments as a percentage of gross annual average household income reduced from a peak of 53% in Q4 2022 to 49% last quarter, but remains well above the long-term average of 38%.
CoreLogic NZ Chief Property Economist Kelvin Davidson said the situation still looks pretty testing for new buyers.
“Even after the recent improvements, almost half of a household’s income being eaten up by interest repayments is relatively unaffordable compared to long-term averages. Although lower mortgage rates seem likely over a one to two year horizon, we’re not expecting any relief via rate cuts in the immediate to short-term,” Mr Davidson said.
“Given the uneasy prospect that property values may start rising, albeit gradually, once again as we’re already starting to see in a couple of regions, this will only add to the strain on new home buyers, at least until interest rates start to come back down,” he said.
Davidson added that rising incomes will only partially offset this.
Each of the main centres still has mortgage repayments as a percentage of gross household income at least eight percentage points higher than their own long-term averages, with Tauranga the most stretched and Wellington the least.
Value to income ratio continues to improve
Properties in New Zealand are now valued at 7.2 times the average household income, down from 7.8 six months ago.
Mr Davidson said the figure has fallen in recent months as property values have dipped and incomes continued to rise amidst the strong labour market backdrop, but remains above the long-term average of 6.1.
“The latest figure of 7.2 is significantly lower than Q1 2022’s peak of 8.8 and is the lowest since 7.1 in Q4 2020. In other words, a lot of the strain that emerged post-COVID has been easing but remains elevated by longer-term historical levels.”
Tauranga remains the least affordable main centre, with a value to income ratio of 9.5 in Q2 2023, followed by Auckland, Dunedin, Hamilton, Christchurch and Wellington.
“After a period of very stretched affordability, the sharp falls in Wellington City house prices lately have seen this part of the country get markedly better in terms of purchasing power and it retains the title of most affordable from Christchurch for the second consecutive report,”Mr Davidson said.
Years to save a deposit reducing
The years to save a deposit measure fell to 9.6, still above the long-term average of 8.1, but two years better than the worst reading seen in Q1 2022 (11.7 years). Again, the latest figure is the lowest since Q4 2020.
Tauranga has the longest period of time required to save a deposit of any of the main centres, at 12.6 years, well above its long-term average of 10.8 years, and the national figure of 9.6 years. However, it has started to improve, having peaked at 15.8 years in Q1 2022.
Rental affordability relatively unchanged
Mr Davidson said rising incomes will have helped tenants in terms of rental affordability, but generally speaking, that has been offset by growth in rents themselves.
“Indeed, at the national level, rents currently absorb 22% of average household income, a touch above the average, but at least not much different from where it’s been for the past few years,” Mr Davidson said.
“The market that stands out is probably Christchurch, which has long been regarded as NZ’s most favourable main centre for housing affordability, both in terms of buying and renting, but this no longer applies to the same extent. Indeed, it’s now relatively more expensive to rent in Christchurch than Wellington, Auckland, and Hamilton.”
Value to
Income ratioShare of income
for repaymentsYears to
save depositRent to
income ratioMain centre
Latest
(Q2 2023)Average
(2004-23)Latest
(Q2 2023)Average
(2004-23)Latest
(Q2 2023)Average (2004-23)
Latest
(Q2 2023)Average (2004-23)
Auckland
8.1
7.2
55%
45%
10.7
9.6
19%
21%
Hamilton
6.8
5.4
47%
33%
9.1
7.2
21%
20%
Tauranga
9.5
8.1
65%
51%
12.6
10.8
29%
27%
Wellington
6.1
5.4
42%
34%
8.2
7.2
18%
18%
Christchurch
6.3
5.2
43%
33%
8.4
7.0
21%
20%
Dunedin
7.2
5.7
49%
36%
9.6
7.6
26%
24%
NZ
7.2
6.1
49%
38%
9.6
8.1
22%
21%
Affordability outlook
Mr Davidson said housing affordability started from such a stretched position that even after the recent improvements, it remains significantly worse than normal.
“We suspect this still-stretched starting point for housing affordability will play a role in capping the rate of price growth over the medium term, as would potential limits on debt to income ratios for mortgage lending that might be imposed by the Reserve Bank early next year.
“But any growth in house prices, even if modest, will put upwards pressure on many of these measures which will see housing affordability remain a critical issue for NZ in the coming years – even if incomes continue to rise and mortgage rates slowly fall in the longer term,” Mr Davidson said.
For more information or to read the latest Housing Affordability Report, visit corelogic.co.nz/news
About CoreLogic NZ
CoreLogic NZ is a leading, independent provider of property data and analytics. We help people build better lives by providing rich, up-to-the-minute property insights that inform the very best property decisions. Formed in 2014 following the merger of two companies that had strong foundations in New Zealand’s property industry – Terralink Ltd and PropertyIQ NZ Ltd – we have the most comprehensive property database with coverage of 99% of the NZ property market and more than 500 million decision points in our database. We provide services across a wide range of industries, including Banking & Finance, Real Estate, Government, Insurance and Construction. Our diverse, innovative solutions help our clients identify and manage growth opportunities, improve performance and mitigate risk. We also operate consumer-facing portal propertyvalue.co.nz – providing important insights for people looking to buy or sell their home or investment property. We are a wholly owned subsidiary of CoreLogic, Inc – one of the largest data and analytics companies in the world with offices in New Zealand, Australia, the United States and United Kingdom. For more information visit corelogic.co.nz.
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Greenhouse gases down in most New Zealand regions in 2022 – Stats NZ media and information release: Greenhouse gas emissions by region (industry and household): Year ended 2022
Greenhouse gases down in most New Zealand regions in 2022 – Media release
22 August 2023
Greenhouse gas emissions decreased in 11 out of 16 regions in New Zealand in the year ended December 2022, according to figures released by Stats NZ today.
Waikato had the largest decrease in total greenhouse gas emissions, between 2021 and 2022, down 2,069 kilotonnes (13 percent), followed by Northland, down 540 kilotonnes (13 percent), and Manawatū-Whanganui, down 271 kilotonnes (4.8 percent).
Between 2021 and 2022, emissions in the Waikato region from electricity, gas, water, and waste services decreased 1,760 kilotonnes (39 percent), while emissions from agriculture, forestry, and fishing fell by 277 kilotonnes (3.5 percent).
Visit our website to read this news story and information release or to download CSV files:
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Culture News – New Zealand Chinese Language Week 2023 – Connecting through Culture
Established to encourage New Zealanders to learn more about Chinese language and culture, New Zealand Chinese Language Week is in its 9th year and Chairperson Jo Coughlan is encouraging anyone with an interest in China andChinese languages to get involved.
Schools, businesses and community groups have events underway to celebrate NZCLW (New Zealand Chinese Language Week) around the country. Teaching assistants from China have arrived back in New Zealand and are working with schools through the Confucius Institutes, providing a welcome boost to schools’ language learning efforts.
“It’s been hugely rewarding to see participation in NZCLW grow over the past nine years” says Jo.
We think this reflects the diverse nature of our society and the willingness of Kiwis to embrace and learn more about different cultures.
“Language is a window to another culture. Whether in Cantonese, Mandarin or other dialects, MPs, local government councillors, business leaders, schools and organisations continue to show their support for NZ Chinese Language Week. Initiatives include Chinese Language Superstars sharing their language learning journeys; community leaders providing videos of support in Mandarin and Cantonese; MPs reading the parliamentary prayer in Chinese Languages; Readings of our Tri-lingual children’s book in libraries and schools around NZ; business leaders challenging their teams to do the 5 Days 5 Phrases Challenge and a nationwide celebration of Dumpling Day.”
This year the NZCLW Trust will distribute more than 3500 copies of a tri-lingual children’s book – Weka’s Waiata – free of charge to schools and public libraries around New Zealand. Weka’s Waiata is produced in Mandarin Chinese, Te Reo Māori, and English, and will be available online and as an audio book.
“We have published seven tri-lingual children’s books and are proud to have donated around 20,000 books to schools and libraries nationwide. These books have been very well-received and welcomed as a valuable resource by parents, teachers, and librarians,” Jo says.
Posters, useful phrases guides, and other Chinese language leaning resources on the website can be downloaded. The hashtags for the week are #nzclw and #nzclw2023 for people to share their posts on social media.
“It’s exciting to see how many events and activities are being planned for the week and it’s great to have such vibrancy and enthusiasm for learning more about Chinese language and culture.”
Events and activities around the country are being shared on the website www.nzclw.com and on social media @__nzclw #nzclw; #nzclw2023; #NZDumplingDay; #5days5phrases; #5days5phraseschallenge.
Chinese Language Superstars are being announced in the weeks leading up to NZCLW.
NZCLW National Dumpling Day will be held on Tuesday 26 September – to coincide with International Dumpling Day.
What is the New Zealand Chinese Language Week Trust?
The NZCLW Trust is a Charitable Trust established to encourage Chinese language learning.
The Board comprises respected academics, former diplomats, and others with an interest in the NZ China relationship. The activities of the Trust are funded by sponsorship and grants from both the New Zealand and Chinese Governments, businesses, and other organisations.
The Trust readily acknowledges that there are many Chinese languages and welcomes participation in New Zealand Chinese Language Week in any Chinese language or dialect.
The primary focus of NZ Chinese Language Week is on Mandarin language learning, as Mandarin is the most widely spoken Chinese language in the world, including in New Zealand; the national language of China; the official language of Taiwan; the national language of Singapore; and the language taught in schools and universities – in New Zealand and internationally.