Stalling Auckland house prices have played a part in an improvement in housing affordability across New Zealand of 5.7% over the last three months of 2015, according to the latest Massey University Home Affordability Report for the 2015 December Quarter.
Although Auckland housing affordability saw a 1.4% improvement over the December quarter, property in the city still remains 59% less affordable than the rest of the country.
"This means that Auckland homes are more affordable than reported in September figures and that the previous deterioration trend in affordability has slowed from 16.6 percent to 3.7 percent," the report's author and property researcher at Massey's school of economics and finance, Susan Flint-Hartle told BusinessDesk.
"Recent reductions in borrowing costs and positive sentiment about a two-year hiatus in interest rates hold the potential to keep pushing house prices higher.
"The margin by which Auckland exceeds the national figure tops historical levels. Other regions are more affordable than the national average.”
The areas that are currently the most affordable include Central Otago Lakes with a significant quarterly improvement of 10.7% and Nelson/Marlborough (7%)
Canterbury/Westland and Hawke’s Bay have both improved affordability by 2.4% and 1.8% respectively.
Waikato/Bay of Plenty (6.1%), have declined in affordability, arguably reflecting the ‘Auckland Ripple Effect’ with similar declines in Wellington (3.3%), Manawatu/Whanganui (2%), Taranaki (0.8%), Northland (0.9%) and Southland (0.1%).
As to whether the upward trend towards more affordable housing is sustainable, the report says the messages are mixed.
“Recent reduction in borrowing costs and positive sentiment about a two year hiatus in interest rises hold the potential to keep pushing house prices higher,” it noted.
“Nationally, interest rates have continued to fall and despite words of caution from the RB governor, there is some speculation that a historically low official cash rate of 2.5% may fall even further. This may encourage more people, both homeowners and investors, into the market increasing demand and putting upward pressure on prices.”