The squeeze continues with persistent decline in housing affordability

Covering the final quarter of 2023, the report shows median house prices have increased in eleven regions with a three per cent increase nationally. Coupled with the concurrent rise in interest rates, national housing affordability has declined by four per cent.

The national house price-to-income ratios have remained the same within the quarter at 10.3 times annual wages.

Four regions experienced a decrease in median house prices, with the Gisborne region notably seeing a 13.8 per cent drop, equivalent to $90,000. The West Coast recorded the highest increase in median house prices for the quarter at 20.2 per cent, reflecting a rise of $67,111.

Report author Dr Arshad Javed from the Massey University Real Estate Analysis Unit (REAU) says the overall decline in affordability is in part due to the increase in interest rate.

“Looking from an annual perspective, the decline in affordability sits at 8.7 per cent nationally. This drop has been driven by the uptick in residential mortgage interest rates, which currently stand at 7.60 per cent, compared to 6.47 per cent a year ago.”

“The decline in affordability is evident in most regions of Aotearoa New Zealand, with the exception of Gisborne and Taranaki. Canterbury has experienced the most significant decline, with a 16.4 per cent drop over the year. Canterbury also saw the highest increase in median house prices, rising by 4.8 per cent, which is equivalent to a $32,000 increase,” Dr Javed says.

The report highlights that incomes have mildly increased by 2.8 per cent in aggregate during the quarter, with fifteen regions showing an increasing trend in average weekly earnings except Wellington. The largest changes in income across the quarter, with a 5.6 percent increase, occurred in Hawke’s Bay.

Read the full December 2023 Home Affordability Report here.