Affordability drop
New Zealanders are still cheering on rising prices even as it becomes harder to pay off a house.
Central Otago Lakes’ median house price is now 15.4 times the region’s average annual wage – and the situation looks to be worsening.
Massey University has released its latest home affordability report, which gauges how hard it is to pay off a house, based on prices, wages and interest rates.
All regions of the country, except Canterbury and Westland, have houses that are now more unaffordable than they were a year ago.
Nationwide, the median house price was up $35,000 year-on-year while wages and interest rates have been stable. Housing affordability was down 4.4 per cent yearon-year but up 3.4 per cent in the the last three months.
Northland, Hawke’s Bay and Central Otago Lakes, which includes the sought-after Queenstown area, had decreases in affordability over the quarter.
‘‘The surge in house prices in Central Otago Lakes means the region is now a record 81 per cent less affordable than the rest of the country,’’ report author Associate Professor Graham Squires said.
‘‘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.’’
Auckland is 53 per cent less affordable than the rest of the country.
‘‘It is clear that . . . affordability is still a national and regional problem in the short and medium term.’’
Graham Squires, Massey University
While there were concerns about affordability, Squires said overall most New Zealanders did not want to see house prices fall because of the significant amounts of equity homeowners and investors had tied up in property.
He said that although affordability concerns were growing in Northland and Hawke’s Bay, house price-to-income ratios in these regions – at eight and 7.4 respectively – were more favourable than Central Otago Lakes and Auckland.
Hawke’s Bay had a year-onyear drop in affordability of 19.2 per cent.
‘‘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,’’ Squires said.
The country’s most affordable regions are still Southland, Manawatu¯ /Whanganui and Taranaki.
Squires said investment activity was playing a role in the areas where affordability had dropped this quarter.