by Miriam Bell
Housing affordability in New Zealand has been improving in recent months, according to the Massey University Home Affordability Report.
The most recent report, which covers the October to December 2015 quarter, shows an overall improvement in national housing affordability of 5.7%.
It also shows an overall annual improvement in national affordability of 8.7%.
Even Auckland, with its much discussed sky high prices, recorded a small quarterly improvement of 1.4%.
This follows on from the slight improvement in Auckland’s affordability reported in Massey’s September 2015 quarter report.
The latest report shows that affordability in Auckland is now deteriorating at a much slower pace of 3.7% annually, as compared to the 16.6% recorded in September.
However, despite this, housing in Auckland is now 59% less affordable than in the rest of New Zealand.
This margin of difference tops historical levels.
Further, report author Dr Susan Flint-Hartle said that, despite the recent trend of improved affordability, there is real possibility of deterioration once again in the coming months.
“Recent reductions in borrowing costs and positive sentiment about a two-year hiatus in interest rises hold the potential to keep pushing house prices higher.”
Interest rates have continued to fall and there is some speculation a historically low official cash rate of 2.5% may fall even further, she said.
“This may encourage more people, both homeowners and investors, into the market increasing demand and putting upward pressure on prices.”
Areas close to Auckland like Waikato and the Bay of Plenty are also less affordable – probably because of the ripple effect from the Auckland market.
Auckland aside, Wellington (3.3%), and Manawatu/Whanganui (2%) recorded a decline in affordability.
On a brighter note, other regions remain more affordable than the national average.
The most affordable area to buy a home is Southland, closely followed by Manawatu/Whanganui and Taranaki.
Meanwhile, Central Otago Lakes (10.7%), and Nelson/Marlborough (7%) showed the biggest improvements in affordability.
The full Massey University Home Affordability Report can be read here.
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