Many of Queenstown’s young couples may be sacrificing having kids to buy a house – because they can’t afford both.
That’s the stark reality of new stats in the latest Roost Home Loan Affordability Index released by top financial website interest.co.nz.
Queenstown is again the least affordable place in New Zealand to buy houses, according to the index.
Based on local median income for the 30-34 age group, a one-wage household simply can’t afford a mid-priced Wakatipu home.
After paying the mortgage, the household would have only $94.41 a week left to live on – out of the median take-home pay of $708.22.
Even counting tax cuts from October 1, there would only be about $123 a week left over.
The formula in the September index equates to 86.7 per cent of the median wage being needed to service an 80 per cent mortgage over 25 years on a mid-range local home – priced in Queenstown at $482,500.
Across New Zealand as a whole, with cheaper house prices and a higher median wage of $765.75, a 30- to 34-year-old homeowner would pay that same 80 per cent mortgage with just 58.1 per cent of weekly take-home pay – leaving $350 to live on, counting the tax cuts.
Double-income couples in the Wakatipu may have a faint chance of becoming home owners, Roost says – but their hard-won house may not hear the patter of little feet for a long time.
With paid parental leave at the statutory pre-tax $441.62 weekly for 14 weeks, the loss of the mother’s normal median income would be unlikely to leave enough to live on after paying the mortgage.
And after baby’s born, the thought of one partner taking time out to be a full-time child raiser for a few years just isn’t on – with only one income, the $120-odd left over wouldn’t go very far.
With our high house prices and low median wages, even scraping together a deposit is harder here than elsewhere.
Roost reckons a single saver in the Wakatipu would take 11.4 years to save the 20 per cent deposit now required by most lenders.
The norm across NZ is 8.5 years.
Houses high, pay low – Roost’s House Price-to-Income Multiple
The table below shows median house prices as a ratio of median household incomes – those incomes are defined as one full-time male worker aged 30-34, a female aged 30-34 working part-time, plus one child aged five, with earned income supplemented by Working for Families credits.
Whole of NZ - 4.6 times (Median house price $350,000, median household income $76,016)
Auckland City - 6.4 times (Median house price $537,441, household income $84,341)
Queenstown – 6.8 times (Median house price $482,500, household income $71,036)