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Home unaffordability breaks records in Auckland

Auckland homes are now 56% less affordable than anywhere else in New Zealand – and the trend looks set to continue.

Monday, July 6th 2015, 12:00AM

by Miriam Bell

The latest Massey University Home Affordability Report shows that home affordability in Auckland declined by 10.2% over the March – May 2015 quarter and by 25% over the previous 12 months.

In contrast, eight of the country’s 12 regions actually showed improvements in affordability over the last quarter.

It was the second consecutive quarter that the margin of difference between Auckland and the rest of the country has reached record levels.

Massey University senior property lecturer Dr Susan Flint-Hartle said the affordability improvements in other regions could not outweigh the “Auckland effect”.

As a result, the quarterly decrease in affordability across New Zealand was 5.4%, while the annual figure now stands at 11.3%.

Dr Susan Flint-Hartle said movements in house prices were the driving force behind both the declines and increases in affordability across the regions.

“House prices increased in all four of the regions that showed affordability declines… But Auckland stands out because its average house price increased by $74,000 over the quarter.”

While the recent cut to the OCR should ease mortgage costs in the short term, Flint-Hartle said the impact on overall affordability in the Auckland market remained hard to predict.

She pointed out that market participants with equity and considerable resources were unaffected by minor interest rate movements.

“It is this group that continues to drive demand for the limited number of properties available in the Auckland market.”

Meanwhile, another Massey University academic issued a warning about the unaffordability of Auckland housing in a presentation at the recent National Advisers Conference. 

Flint-Hartle’s colleague, Dr Jeffrey Stangl, told attendees that the average Auckland house price was now eight times the median income.

Yet Massey University’s studies showed that most New Zealanders want to own their own home.

At the same time, most people had unrealistic expectations of the savings necessary for them to achieve home ownership.

He voiced the concern that, once interest rates start climbing, many property owners who were already stretched in terms of debt would struggle to keep up with their commitments.

Stangl suggested that, if people desperately wanted to get on to the property ladder, it might be more sensible to try alternatives like Real Estate Investment Trusts or Listed Property Vehicles.

*The full Massey University Home Affordability Report can be read here.

« Could Auckland’s property market be slowing?Are buyers starting to look out of Auckland? »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

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