by Miriam Bell
Auckland and Central Otago Lakes continue to be, by far and away, the least affordable regions to buy a property, according to the September quarter’s Massey University Home Affordability Report.
The two regions are now 62% and 61% respectively less affordable than the rest of New Zealand – a nearly unprecedented level of difference.
However, it is another region’s decline in affordability, over that period of time, which indicates the strain on the Auckland market.
Massey University senior property lecturer Susan Flint-Hartle said most of the country, including Auckland, saw modest improvements in affordability over the year to September 2016, largely due to steady reductions in the OCR,
The exceptions to this were the Central Otago Lakes region, which saw the biggest decline in affordability (down 20.9%), and the Waikato/Bay of Plenty region.
Flint-Hartle said the Waikato is 4.7% worse off than one year ago, despite considerably lower borrowing costs.
“Worsening in affordability here can be attributed to a spillover from Auckland as those locked out of the Auckland market look to areas closely connected to the city.”
In Auckland, demand continues to drive median house prices up, making entry into the Auckland market a challenge, she said.
“Auckland has hit a new high median for this quarter of $842,500 in August, which represents a 13.85% increase, or over $100,000, over the past 12 months.
“The median house price in Auckland is now 13.5 times median annual household income, which will continue to place strain on first home buyers in our largest city.”
Meanwhile, the Central Otago Lakes region’s decline in affordability is exacerbated by the booming tourism industry putting stress on the supply of affordable housing, Flint-Hartle said.
Increases in house prices in many regions are significantly outstripping wage growth, but the OCR reductions are easing the burden for many home buyers.
Flint-Hartle said the exceptions to this are first home buyers in Auckland and the Central Otago Lakes region.
“They are facing more stringent deposit requirements, markets characterised by intense competition and a lack of supply.”
She added that cheaper borrowing holds the potential to push house prices higher if demand for housing continues to grow.
“This could lead again to a deterioration in housing affordabiilty as we move into the summer period.”
New Zealand’s most affordable region is Manawatū/Whanganui, which is 54% more affordable than the rest of the country.
| « LVRs starting to bite - REINZ | Market settles into cruise mode » |
Special Offers
No comments yet
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved