Home affordability has improved slightly, according to a quarterly survey by Massey University – but problem areas persist in Northland, Hawkes Bay and Central Otago Lakes, where some buyers are still left out in the cold.
The report covers December to February and shows that slightly lower median house prices (rather than increased wages) are the main driver of changes in affordability across the country.
Most regions saw a quarterly decline in median price but there were increases in Northland ($25,000), Hawke’s Bay ($29,950) and Central Otago Lakes ($53,500).
The country’s most affordable regions are Southland (down $25,000), Manawatu/Whanganui (down $9000) and Taranaki (down $10,000).
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Associate professor Graham Squires, author of the Home Affordability Report — which takes into account the cost of borrowing, house prices based on sales and people’s income — says the changing picture across the country makes it hard to make long-term predictions.
But while the latest quarterly figure shows a small drop in median prices (1.9 per cent down on the previous quarter), year-on-year changes show a national increase of $35,000.
“We saw a resurgence in house prices for many regions last quarter, followed by a fall-back for some and a rise for others,” he says. “The very different sub-market characteristics of regional property may play a role in this regional volatility — particularly when we look at Hawke’s Bay and Central Otago Lakes compared to the dominant market of Auckland.”
He says the surge in house prices in Central Otago Lakes means the region’s median house price is now 15.4 times its average annual wage, compared to Auckland where house prices are 13.1 times annual wages.
While affordability concerns are growing in Northland and Hawke’s Bay, house price-to-income ratios there are 8 and 7.4 respectively — still lower than Central Otago Lakes and Auckland.
“While the situation is changing from quarter to quarter, it is clear that New Zealand home affordability is still a national and regional problem in the short and medium term,” says Dr Squires.
The full report can be downloaded from here: http://bit.ly/home-affordability-apr2018
Quick look
In the last quarter, nationwide median sales prices are down 1.9 per cent. But in the 12 months to February, prices have risen an average $35,000.Most regions show a declining quarterly rate of median house price growth, except for quarterly increases in Northland (5.9 per cent), Hawke’s Bay (7.3 per cent) and Central Otago Lakes (7.4 per cent).
Central Otago Lakes, including Queenstown, continues its record as the most unaffordable region in New Zealand with median house prices now over 15 times annual wage income.
Source: Massey University
Infographic video: https://www.youtube.com/watch?v=DlDFriUjWsA&feature=youtu.be
