Housing affordability falls in regions
It is getting less affordable to buy a house in regional New Zealand, Massey University’s latest research shows.
Its Home Affordability report reveals most regions have become less affordable over the most recent quarter, as well as over the past 12 months.
The only exceptions are Otago, which excludes the expensive Central Otago Lakes region. It improved by 1.9 per cent over the most recent quarter, and Canterbury/Westland, which showed a 0.5 per cent improvement year-on-year.
Affordability is measured based on house prices and borrowing costs compared with wages. The report does not consider the deposit required to buy.
The report, which covers the period from March to May 2017, shows a nationwide increase of 9.1 per cent in the median house sales price over the quarter, contributing to an annual increase of 6.8 per cent.
‘‘Some of the regions are surging past Auckland as a percentage change,’’ said report author Associate Professor Graham Squires from Massey University’s school of economics and finance.
‘‘Year-on-year median house prices in Northland have increased by 28.3 per cent and in Nelson prices are up 21.8 per cent. This compares to a 3.7 per cent increase in Auckland.’’
While house price increases have been the driving force behind declining affordability in other regions, Squires said Central Otago Lakes and Auckland remained the least affordable regions in New Zealand.
Affordability in Central Otago Lakes is dropping at a faster rate than Auckland and the region is now 70 per cent less affordable than the rest of the country.
‘‘It’s likely this decline in affordability in Central Otago Lakes is a continued reflection of tourism industry demand in Queenstown, a shortage of housing supply, speculative investment demand and largely stagnant wages in the region,’’ Squires said. ‘‘Auckland also remains 48 per cent less affordable than the rest of New Zealand.’’
The most affordable region remains Southland, despite a 13.7 per cent decline in affordability over the most recent quarter. Median house prices in Southland lifted $31,000 or 14.8 per cent over the period.
‘‘Southland has a traditionally low base in median house prices, but has now joined eight other regions in surpassing Auckland in terms of their percentage price increase over the past 12 months,’’ Squires said. –Stuff