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Declining home affordability is now ‘business as usual’
The latest Massey University Home Affordability Report suggests last quarter’s fall in house prices was just a “blip” in an otherwise upward trend.
The report, which covers the period from September to November 2017, shows median house prices increased in all New Zealand regions over the past 12 months and, in the most recent quarter, prices grew in every region except Central Otago Lakes.
“It is interesting to see the fall in house prices in many regions last quarter hasn’t continued,” says report author Associate Professor Graham Squires from Massey’s School of Economics and Finance.
“All the past and current data indicates the dip in prices was just a blip, and the longer term trend is decreasing affordability. We’d argue that this trend – rising house prices and houses becoming more unaffordable – is actually business as usual.”
All regions showed a decline in affordability over the past year and only Hawke’s Bay and Nelson/Marlborough showed small improvements over the most recent quarter. The biggest declines in affordability this quarter were in Taranaki (at 9.8 per cent) and Wellington (at 8.6 per cent).
New Zealand’s capital experienced the largest quarterly median house price increase at $48,000. The only regional decline during the same period was in Cetral Otago Lakes, where the median house price dropped by $3500.
“However, this small drop in price will not bring much relief to those looking to purchase a house in the region,” Dr Squires says. “Central Otago Lakes, which includes Queenstown, is still the most unaffordable region in New Zealand. It’s 69 per cent less affordable than the rest of the country and the median house price there is now 15 times annual wages.”
Rising house prices have continued to impact Auckland’s affordability; the country’s largest city is now 53 per cent less affordable than the rest of New Zealand, and the median house price is 13.5 times annual wages in the city.
Southland and Manawatū/Whanganui remain New Zealand’s most affordable regions, although both experienced declines in affordability over both the quarterly and annual time periods.
The full Massey University Home Affordability Report can be downloaded here: http://bit.ly/home-affordability-jan18
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