Tax cuts make homes more affordable

The Government's package of income tax cuts helped improve home loan affordability last month by the most in nearly two years, a report shows.

But it's still not enough for a typical buyer, on a single income who has saved a 20 per cent deposit, to comfortably buy a home in New Zealand.

Houses are described as affordable when 30 per cent of an income is needed to repay a mortgage.

The affordability report, compiled by Roost Home Loans mortgage brokering group, shows it now takes 55.7 per cent of one median weekly take-home pay of $799.06 to pay the mortgage on a median-price house bought during October, down from 57.9 per cent in September.

This represented the biggest progress since a 6 per cent rise in affordability, from 60 per cent to 54 per cent, in January last year, when interest rates and house prices were falling sharply, the report said.

Home loan affordability is now back at levels seen in June 2004, before the housing boom.

Income tax cuts which took effect from October 1 improved median take-home pay by about $30 a week.

To read the full NZ Herald article, click here

Posted: 18 Nov 2010

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