A slight fall in the median house price and flat interest rates helped reduce the proportion of after-tax pay needed to service a mortgage on a median home to 55.9 percent in May from 56.4 percent in April.

This is according to the latest BNZ home loan affordability survey produced by Interest.co.nz.

Home loans were most unaffordable in March last year when they took 83.4 percent of after-tax pay to service.

Affordability improved throughout 2008 but the improvement ended in February, March and April of this year when house prices stopped falling and interest rates began to bottom out.

"Home buyers will welcome this slight improvement again after a few months of stagnation," said BNZ general manager of strategy and marketing Blair Vernon.

The threshold proportion of after tax income considered prudent to sustainably own a house is around 40 percent.