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No let-up in affordability issues

Housing affordability has improved in New Zealand’s most expensive regions but it’s deteriorating on a nationwide basis.

Tuesday, February 12th 2019, 11:46AM 1 Comment

by The Landlord

Massey University’s latest Home Affordability Report is out and it shows a quarterly decline of 2.2% in national affordability, driven by increases in median house prices.

The report, which covers the quarter from September to November 2018, shows an average increase in median house price of 4.6% across all regions.

This was only partially offset by wage increases in most regions and lower mortgage interest rates.

Massey University’s David White, who is the report’s author, says median house prices increased in some unexpected regions.

“For example, house prices in Southland went up by 15.5% and in Taranaki they increased by 13.7%, although both of these regions have seen solid wage growth in the past quarter.”

In contrast, New Zealand’s most expensive regions – Auckland and Central Otago Lakes – flew below the radar in terms of median house prices.

Auckland saw a modest median price increase of just 1.6%, while Central Otago Lakes’ median price increased by 10.6% but off a low base from the previous quarter.

As a result, Auckland’s affordability improved by 0.8% over the last quarter. It also showed improvement over the relevant 12-month period.

The only other region to exhibit greater affordability over the last quarter was Waikato (by 2.1%). Over the 12-month period, half of the regions showed affordability improvements, including Central Otago Lakes.

White says that, after Canterbury/Westland where affordability improved by 9.3% over the past year, the biggest improvements actually came from the country’s most unaffordable regions.

“Auckland became 7.5% more affordable over the past year, and Central Otago Lakes showed a 5.3% improvement.

“Unfortunately, for those looking to buy a home in these regions, they still remain the least affordable places in New Zealand.”

Central Otago Lakes is currently 60% less affordable than the rest of New Zealand, with median prices there at 14.6 times the annual wage in that region.

Auckland remains 42% less affordable than the rest of New Zealand, with a house price-to-income ratio of 12.9.

White says the big picture trends show that, after a short reprieve, home affordability over the past 12 months has now continued to decline in half of New Zealand’s regions.

“While improvements in incomes and interest rates are helping would-be homebuyers, these are being outstripped by rising house prices in many regions.

“This is reflected in the fact that across New Zealand, the house price-to-income ratio has deteriorated from 8.8 to 9.1 times annual wages over the last quarter.”

Southland remains the country’s most affordable region, despite becoming considerably more unaffordable over the last quarter.

 

Tags: affordability house prices housing market Massey University\ property investment

« Confidence in rental property at 4 year lowSong of subdued values remains the same »

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Comments from our readers

On 13 February 2019 at 5:15 pm John Butt said:
These guys are continuing to run a story about affordability that is an utter nonsense. When did any bank last do a price/wages calculation before offering a loan.
Banks typically calculate affordability as mortgage payments with principle included (not price), divided by household income (not wages) - an extremely different calculation.
Please improve reporting on this one - Here is a government supplied index which is far more accurate: https://www.mbie.govt.nz/building-and-energy/tenancy-and-housing/housing-affordability-measure/the-housing-affordability-measure-for-potential-first-home-buyers/

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
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BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.09 6.95
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
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TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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