For the first time since the end of 2001 the New Zealand Home Affordability Index has shown a quarterly improvement in affordability. The slight improvement of 0.7% in the March quarter comes in the face of record house sales across the country.
Although sales have continued to be strong, house prices have stabilised in the past three months. Another stabilising impact on the home affordability index has been the solidity of interest rates, which did not change during the quarter. Wages, the third factor in the make up of the index, showed a marginal lift of 0.7% over the quarter.
The index, which is compiled by Massey University, shows that current home affordability is tracking near its average over the past decade.
In the previous four quarters New Zealand home affordability trended downwards with consecutive quarterly falls of 4.7%, 14.9%, 0.1% and 3.3%. In the past 12 months national home index has declined 18%, which means homes are now 18% less affordable than a year ago.
The New Zealand Median Dwelling Price ended the quarter unchanged at $195,000. The Real Estate Institute reported quarterly sales up 18% (25,549) compared to the same period last year (21,651). Dwelling sales for January, normally a quiet month, totalled 8,159 homes changing hands, a record for that month. Home loan interest rates are expected to remain stable for the rest of the year, signalling ongoing strength in the residential property market.
Four of the 11 regions surveyed recorded a quarterly improvement in home affordability. Wellington reported the strongest improvement with 4.1% followed by Canterbury/Westland (2.3%), Manawatu/Wanganui (2%) and Auckland (1.1%). All the other regions reported a quarterly decline in home affordability. The steepest quarterly decline of 14% in home affordability was recorded in Nelson/Marlborough followed by Taranaki (10.5%), Northland (6.2%), Waikato/Bay of Plenty/Gisborne (2.8%), Hawke’s Bay (2%), Otago (1.8%), and Southland (1%).
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