Less affordable is new normal: report
New Zealanders have to get used to declining home affordability, new research suggests.
Massey University’s latest home affordability report compares median dwelling prices with weekly earnings and mortgage interest rates.
It covers the September to November quarter and shows median house prices increasing in all parts of New Zealand over the previous 12 months.
A fall in house prices recorded in the June to August quarter and a resulting increase in affordability did not continue.
Report author Graham Squires, who is an associate professor in Massey’s school of economics and finance, said it seemed that had been a blip.
‘‘The longer-term trend is decreasing affordability. We’d argue that this trend – rising house prices and houses becoming more unaffordable – is actually business as usual.’’
All regions showed a decline in affordability year-on-year and only Hawke’s Bay and Nelson/ Marlborough showed small improvements over the quarter.
The biggest declines in affordability for the quarter were in Taranaki, at 9.8 per cent, and Wellington, at 8.6 per cent.
Wellington had the largest quarterly median house price increase, of $48,000.
The only region to experience a price fall in the three months was in Central Otago Lakes, where the median house price dropped by $3500.
‘‘However, this small drop in price will not bring much relief to those looking to purchase a house in the region,’’ Squires said.
‘‘Central Otago Lakes, which includes Queenstown, is still the most unaffordable region in New Zealand. It’s 69 per cent less affordable than the rest of the country and the median house price there is now 15 times annual wages.’’
Rising house prices have continued to affect Auckland’s affordability. The city is now 53 per cent less affordable than the rest of New Zealand, and the median house price is 13.5 times annual wages in the city.
Southland and Manawatu¯ / Whanganui remain New Zealand’s most affordable regions, although both experienced declines in affordability over both the quarterly and annual time periods.
There have been reports that the market might be being buoyed by a surge in foreign buyers.
Chinese real estate portal Juwai has been marketing the country to help buyers beat the law change that will stop them buying existing residential property. The campaign has reportedly been a success, with a 35 per cent increase in buyer demand or inquiries.
But at Realestate.co.nz, spokeswoman Vanessa Taylor said there was no sign of a foreign buyer surge. ‘‘Listings are down and so is demand.’’