Affordability trends have improved in the last three months thanks to falling mortgage rates, static house prices and wage improvements, the latest Massey University Home Af-fordability Report reveals.
The report shows home affordability throughout New Zealand has improved by 2.3 per cent over the quarter from June to August 2015, although the national index remains in decline, dropping 6.7 per cent year-on-year.
“Even Auckland falls in line with this trend,” says Massey University senior property lecturer Dr Susan Flint-Hartle. “Affordability in our largest city has improved by 4.9 per cent since our last report in June.”
But affordability in the city has still dropped by 16.6 per cent in the past year, Dr Flint-Hartle says.
“While affordability trends show some improvement in this report, the relative levels of af-fordability across the country haven’t really changed much. You must remember that these small improvements are coming off the back of historic levels of unaffordability.”
Auckland is still 52 per cent less affordable than the national average, four per cent less than the 56 per cent last quarter, but still close to that historic high.
Dr Flint-Hartle says house prices were the main driver behind regional movements in afford-ability.
The biggest improvements in affordability over the quarter were in Central Otago Lakes (10.5%), Southland (9.6%), Manawatu/Wanganui (8.0%), Northland (6.2%) and Taranaki (6.1%) which also had the largest falls in house prices.
“Meanwhile, the only region not to show some improvement over the past three months was Nelson/Marlborough, where house prices increased by the largest margin.”
The findings show this region experienced the largest house price rise, enough to outbalance the positive effects of cheaper mortgages and wages that rose at twice the national rate.
Dr Flint-Hartle notes the impact the Reserve Bank’s cash rate cut, which occurred after the period covered by the report.
“While that reduces borrowing costs for homebuyers, improving affordability in the short-term, it remains to be seen whether lower mortgage rates also push up house prices in the longer-term.”