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Auckland no longer least affordable

Think Auckland has the most unaffordable housing in New Zealand? Think again. It’s now the Central Otago Lakes region.

Thursday, April 6th 2017, 2:00PM

by Miriam Bell

Massey University’s latest Home Affordability Report is now out and it shows that Central Otago Lakes has surpassed Auckland as the most unaffordable region in New Zealand.

Affordability in Central Otago Lakes declined by 8.2% in the quarter from December 2016 to February 2017 as house prices in the area rose by 30.4%.

In contrast, Auckland’s median house price dropped by 6.1% ($51,944) over the quarter, which led to a 7.5% improvement in its affordability.

The report author, Massey University associate professor Graham Squires, said Central Otago also had the largest decline in affordability over the 12-month period.

“This is a reflection of tourism industry demand in Queenstown, a shortage of housing supply, speculative investment demand, a focus on high-end lifestyle living in the area, and largely stagnant wage increases.”

However, Central Otago Lakes and Auckland remain the two least affordable regions of New Zealand by a clear margin, he said.

“Auckland still sits at 55% less affordable than the rest of the country, and Central Otago Lakes is now 68% less affordable than the rest of New Zealand.”

Further, Squires said the ratio of median house price to median wage remains very high in Auckland and Central Otago Lakes.

“In our two most expensive regions this will continue to place strain on first home buyers, especially in Central Otago Lakes where the median house price is nearly 14 times the median annual wage.”

National affordability improved over the quarter. This was driven by a fall in house prices in seven regions, including Auckland.

Squire said improvements in affordability have been driven by slowing house prices and continued low interest rates – but there are indications that interest rates are on the rise.

It was important to note that that the quarterly interest rate used to calculate the index is a weighted average of all loans and that is currently at 4.85%, he said.

“New customers’ rates for January are now much higher – generally between 5% and 6%, depending on the type and term of the loan.

“It is possible more stringent deposit and bank lending requirements and interest rate rises could make it more difficult for home buyers in the future.”

Read more:

Super City affordability slides further 

Auckland affordability a credit negative – Moodys 

« Apartment attraction on the riseShortfall to get worse before it gets better »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.45 2.99 3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 11 August 2020 8:24am

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