Nationwide home affordability improves
Wednesday 28 March 2012
Auckland has retained its position as the least affordable location to buy a house in New Zealand, according to the latest Massey University Home Affordability Report.
By The Landlord
However, during the first quarter national affordability improved 4.9% and seven of the 12 regions also showed improvement.
Taking an annual view, the trend towards greater affordability is even more pronounced, up 8.8% with Canterbury the only region from 12 to see a decline in affordability in the past year.
Massey University said affordability had improved - and more first-time buyers were entering the market - due to three key drivers; a fall in the median house price to $355,000, an increase of $4.06 in the average wage and a decrease in the average monthly mortgage interest rate from 6.15% to 6.08%.
"It seems historically low mortgage rates, combined with more relaxed lending criteria by banks , are beginning more first-time buyers into the market," said Professor Bob Hargreaves of Massey's Real Estate Analysis Unit.
Given the role of interest rates, the report suggests the improvements in affordability may be short lived.
"Interest rates will not remain this low indefinitely," Hargreaves said.
"Increased turnover rates indicate that demand is causing pressure in parts of the housing market, particularly in Auckland and Christchurch."
Over the last quarter seven locations showed improvements in affordability; Southland (9.1%), Auckland (6%), Otago (4.9%), Canterbury/Westland (4.7%), Otago/Lakes (3.4%), Manawatu/Wanganui (2.9%) and Taranaki (1.7%).
Affordability worsened in Northland (3%), Hawkes Bay (2.9%), Nelson/Marlborough (1.2%), Wellington (0.5%) and Waikato/Bay of Plenty (0.4%).
Despite its improved affordability over the quarter Auckland remained the least affordable location, closely followed by Otago/Lakes with Nelson/Marlborough in third place.
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