National home affordability has declined during the quarter from September to November 2018.
According to Massey University’s latest Home Affordability Report, there was a 2.2% quarterly decline in housing affordability. This was driven by increases in median house prices, with an average of 4.6% across all regions. This was only partially offset by wage increases in most regions and lower mortgage interest rates.
Median house prices increased in some unexpected regions, report author David White said. He explained that house prices in Southland went up by 15.5%, and increased by 13.7% in Taranaki. This is despite both of regions experiencing solid wage growth in the past quarter. Meanwhile, he noted New Zealand’s most expensive regions were unusually below the radar. Auckland reportedly recorded just 1.6% increase and Central Otago Lakes by 10.6%, which comes off a low base from the previous quarter.
The report suggests only Auckland (0.8%) and Waikato (2.1%) regions showed improved affordability over the last quarter. Central Otago Lakes is currently 60% less affordable than the rest of the country and median house prices there now cost 14.6 times the annual wage in that region. Auckland remains 42% less affordable, with a house price-to-income ratio of 12.9.
Canterbury/Westland experienced the most significant improvement in affordability of 9.3% over the past year. Southland remains the country’s most affordable region, despite becoming considerably more unaffordable over the last quarter
“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,” White said. “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,” he added.