New Zealand home affordability worsens

Home affordability across New Zealand has deteriorated by 7.6 per cent over the past year, according to Massey University’s Real Estate Analysis Unit.

The unit’s latest Home Affordability Report, which covers the quarter from March to May 2014, has just been released and the news for would-be home buyers is not good. The report’s author Professor Bob Hargreaves says the overall decrease in affordability is no surprise.

“The average annual wage increase of $34.53 was not enough to offset a $38,000 increase in the median house price,” Professor Hargreaves says.

“This deterioration in affordability is likely to continue as recent interest rate increases are incorporated into the debt servicing costs for home mortgages.”

On a quarterly basis, the national affordability index deteriorated by 4.5 per cent, compared with a 2.8 per cent improvement in the previous quarter.

Auckland was, unsurprisingly, the least affordable region followed by Central Otago/Lakes and Canterbury. Southland retained its place as the country’s most affordable region, followed by Manawatū/Wanganui and Taranaki.

Professor Hargreaves says one of the most striking trends is the growing gap in affordability between larger urban centres and provincial towns, caused mainly by the differences in house prices between regions.

When viewed on an annual basis, there were actually five regions that showed improved affordability over the past 12 months: Southland, Taranaki, anawatū/Wanganui, Nelson and Otago.

The full report can be viewed at: http://bit.ly/home-affordability-june14

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