Improved Affordability for First Home Buyers as Lower Quartile House Prices and Mortgage Rates Decline

Date Published: 23 February 2024

Key Facts

• Lower house prices and declining mortgage interest rates have resulted in increased affordability for first home buyers in most parts of the country in January 2024.
• The national lower quartile selling price was $566,000, which decreased by $20,000 from December last year, according to the Real Estate Institute of NZ.
• There was a decrease in lower quartile prices in Auckland, Waikato, Taranaki, Wellington Region, Nelson/Marlborough, and Canterbury. Conversely, there were increases in Northland, Bay of Plenty, Hawke’s Bay and Southland.
• The average two-year fixed rates offered by major banks reduced slightly from $6.98% in December to 6.89% in January.
• As a result, mortgage payments for a home purchased at the national lower quartile price with a 10% deposit decreased from $907 a week in December to $869 in January.
• Wages have also continued to increase, further improving the affordability of housing, with the median after-tax pay for couples aged 25-29 increasing from $2048 a week in December to $2059 in January.

Article Summary

In January 2024, first home buyers experienced a boost in affordability due to a combination of lower house prices—particularly at the bottom of the market—and declining mortgage interest rates, while wages continued to rise. The national lower quartile selling price was $566,000, a significant $20,000 drop compared to December of the previous year, as per data from the Real Estate Institute of NZ.

This decrease in lower quartile prices was evident in several regions, including Auckland, Waikato, Taranaki, the Wellington Region, Nelson/Marlborough, and Canterbury. However, in contrast, there were price hikes in regions such as Northland, Bay of Plenty, Hawke’s Bay and Southland. Simultaneously, a minor decrease in two-year fixed rates offered by major banks from 6.98% to 6.89% further contributed to lower mortgage payments for these new home buyers.

On a practical level, this meant that the weekly mortgage payments for a home purchased at the national lower quartile price with a 10% deposit saw a reduction from $907 in December to $869 in January. On top of this, there was a continued upward trend in wages. The median after-tax pay for full time working couples between 25 to 29 years increased from $2048 a week in December to $2059 in January. This favorable combination of lower mortgage payments and increasing wages resulted in a significant advancement in housing affordability.

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