House affordability for the rest of the year was likely to decline, after a number of years of improvement, First National Bank said on Wednesday.
While house price growth was still solid, interest rates were expected to increase and average employee pay growth was struggling, the bank’s household and property sector strategist John Loos said in a statement.
House price growth had started the year higher than employee remuneration growth, as interest rates were now believed to be in a rising phase.
“It also looks unlikely that housing affordability will meaningfully improve its affordability position relative to consumer goods and services affordability in the near term,” Loos said.
“Therefore, the overall affordability picture for 2014 looks set to be one of mild deterioration, and this informs our expectation that house price growth will slow mildly further through 2014.”