Housing has become significantly less affordable in many centres says Arcus chief economist Rozanna Wozniak.
Thursday, March 15th 2007, 11:48AM
by The Landlord
Wozniak has used previously unreleased census data to analyse housing affordability on a regional basis by comparing median income and Quotable Value house price data.
A regional comparison of median incomes from the 2001 and 2006 censuses against median house price data from Quotable Value shows that in most centres, the rise in median house prices easily outstripped growth in median incomes during that five-year period.
One of the few places that has consistently been one of the more affordable places to buy a home is Gore, with a ratio of just 4.2 times income.
This low ratio is despite rapid house price gains. Gore averaged gains of 15% per year in the five years to March 2006, despite a decline in its resident population of 348 people during that five-year period.
Although affordability (the ratio of median house prices to median incomes) fluctuates over time, Wozniak doubts that there can be a convergence of the ratio to the point that houses will be almost as affordable in Auckland as they are in Gore.
“While there may be some logic to the catch-up and convergence argument, supply and demand must eventually prevail. Convergence can only occur if people are willing to move from Auckland to cheaper locations such as Gore.”
“Centres experiencing rapid population growth such as Auckland and Queenstown will, over the longer term, continue to appreciate faster than towns that have a stagnant or shrinking population.”
Wellington City is considerably more affordable than Auckland, Spicers Household Savings Indicators report shows. House prices are lower and the median income is higher.
Spicers continue to expect a slowing in parts of provincial New Zealand (where recent housing gains have been the strongest during the last year).
“House price data suggests that this is already starting to happen,” Spicers’ report says.
