The quarter's Massey University Home Affordability Report shows large regional variation.
Massey University’s latest Home Affordability Report shows a decline in national affordability, but New Zealand’s least affordable region is bucking that trend.
The report, which covers the quarter from March to May 2018, shows the median house price in Central Otago Lakes dropped by $67,000, leading to the region’s first improvement in affordability since August last year.
Despite this, Central Otago Lakes continues its reign as the least affordable place to live, at 51 per cent less affordable than the rest of New Zealand. Auckland follows some way behind, at 43 per cent less affordable than the rest of the country.
Report author Associate Professor Graham Squires says quarterly improvements in affordability appears to be in many high-value markets.
“The slowdown and improvements in affordability in high-value areas may be associated with a saturated market in these regions,” he says, “although we should also be mindful that Central Otago Lakes is quite volatile and experienced an increase in median house price of $50,000 in just the previous quarter.”
Rising house prices still to blame
Rising house prices continue to drive the country’s overall decline in affordability, with annual price increases across most regions. This has led to a national decline in affordability of 5.8 per cent for this last quarter, and 1.1 per cent for the past year.
Northland showed the largest decline in affordability, at seven per cent over the most recent quarter, due to a median house price increase of $27,000. Wellington, Otago and Manawatu/Whanganui also had median house price increases of over $20,000.
Report author Associate Professor Graham Squires.
Large regional variation
This quarter’s report shows large regional variation, with five out of 13 regions showing affordability improvements, including the high-value markets of Central Otago Lakes and Auckland. Central Otago Lakes showed the largest improvement in affordability, at 11.5 per cent over the last quarter, followed by Hawke’s Bay at 8.1 per cent.
Dr Squires says high-value regions may be showing affordability improvements at the expense of lower-value regions.
“Outside of traditionally overheating markets like Auckland and Queenstown, regions with lower relative values like the Manawatū may be showing investment improvements as investors seek houses in regions that might yield greater returns on capital,” he says.
Besides Northland, the most significant declines in affordability were in the regions of Manawatū/Whanganui, at 6 per cent, and Otago, at four per cent.
Southland, Taranaki and Manawatū/Whanganui remain the country’s most affordable regions at 54 per cent, 43 per cent and 41 per cent more affordable than the rest of New Zealand respectively.