by Miriam Bell
Massey University’s latest Home Affordability Report shows there was a decline of 9.6% in national affordability in the March to May 2017 quarter.
It also shows that most regions have seen a decline in affordability over the quarter, as well as over the past 12 months.
The only exceptions are Otago – not including the Central Otago Lakes region – where affordability improved by a modest 1.9% over the quarter, and Canterbury/Westland where affordability improved by 0.5% year-on-year.
According to the report, the decline in affordability was largely driven by increases in house prices in nine regions over the quarter, which contributed to a 9.1% increase in the median house sale price.
Massey University associate professor Graham Squires, who authored the report, said that, when it comes to house price growth, some of the regions are now surging past Auckland.
“Year-on-year median house prices in Northland have increased by 28.3% and in Nelson prices are up 21.8%. This compares to a 3.7% increase in Auckland.”
Borrowing costs generally remain low which means the key element driving New Zealand’s affordability statistics are property prices, he said.
“But New Zealand house prices need to be placed in a global perspective.
“There has been a slowdown in house prices in some overseas cities and the global flows of funds can have an impact on bank lending and demand for housing in global cities like Auckland.”
Meanwhile, although regions around the country have seen a decline in affordability, Central Otago Lakes and Auckland remain the least affordable regions in New Zealand.
The Central Otago Lakes region has soared past Auckland to become the least affordable region in the country.
It saw affordability decline by 10.5% over the quarter and is now 70% less affordable than the rest of the country.
Squires said that it’s likely this is a continued reflection of tourism industry demand in Queenstown, a shortage of housing supply, speculative investment demand and largely stagnant wages in the region.
“But Auckland, where affordability dropped by 4.5% over the quarter, also remains 48% less affordable than the rest of New Zealand.
"So first homebuyers in these two regions still face considerable barriers to entering the residential property market.
“This is clearly illustrated by the house price-to- wage ratios: median house prices are now 15.2 times annual wages for the Central Otago Lakes region and 13.3 times annual wages for Auckland.”
Southland remains the most affordable region in the country, despite a 13.7% decline in affordability over the quarter.
Read more:
Super City affordability slides further
Auckland affordability a credit negative – Moodys
Affordability measure proves more houses needed
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