Homes are still affordable here
"It will be interesting to see if the trend [of slower house price growth] we are now experiencing continues into the next quarter." Associate Professor Graham Squires.
House prices are rising faster in Manawatu/whanganui than in Auckland, but the region is still one of the most affordable places in New Zealand to buy a home.
Massey University’s home affordability index has Manawatu/whanganui becoming more affordable in the past year, with Southland the only region that was more affordable.
The index uses wages, interest rates and house prices to measure how affordable home ownership in the regions is.
While interest rates have the same impact across the country, the other two variables are more closely pegged to each region.
The report’s author, Associate Professor Graham Squires, said housing across the country became more affordable in the past three months due to house prices falling in several regions.
However, the first quarter of a year usually experienced a slowdown in sales.
‘‘It will be interesting to see if the trend we are now experiencing continues into the next quarter.
One of the most interesting takes from the index was Central Otago Lakes, an area that includes Queenstown, overtaking Auckland to become the country’s most unaffordable place to buy.
Squires said that was probably due to tourism, a shortage in housing supply, stagnant wages and speculative investment.
Auckland’s traditionally unaffordable housing market was part of it being a ‘‘global city’’, much like London, Sydney or Vancouver, he said.
The housing markets in other global cities were slowing down, so overseas money could be heading to cities that were not traditionally subject to foreign cash.
‘‘Queenstown is an example of, maybe, being more on the international map.
‘‘It that’s the case, it will be interesting if people discover places like New Plymouth, Napier or even good old Palmy.’’
Manawatu house prices have risen in the past year faster than Auckland’s - up by 9.2 per cent and 6.7 per cent, respectively - which could be a sign of capital flowing out of the country’s largest city into the regions, Squires said.
Various things could make property more affordable, but they could impact certain groups of buyers in different ways, Squires said.
Interest rate rises traditionally resulted in house pricess falling. While falling prices could see property become more affordable, rising interest rates made it hard for first-home buyers to get a mortgage.
‘‘Then you’ve got people who have to service the mortgages they already have, which are going to get higher [repayments].‘‘
Interest rates were forecast to rise in the future, so seeing how that impacted bank lending would be important in future affordability studies, he said.
Overseas factors such as international capital flows, which could impact bank lending, could have a flow-on effect to house prices, Squires said.