Housing affordability worsens

It has released its latest Home Affordability Report, covering March to May 2014. It compares the average weekly earnings with the median dwelling price and mortgage interest rates.

Author Professor Bob Hargreaves said the decrease was not a surprise.

“The average annual wage increase of $34.52 was not enough to offset a $38,000 increase in the median house price. This deterioration in affordability is likely to continue as recent interest rate increases are incorporated into the debt servicing costs for home mortgages.”

The decrease of 4.5% in the national affordability index comes after a 2.8% improvement in the previous quarter.

Auckland was the least affordable region, followed by Central Otago/Lakes and Canterbury. Southland remained the country’s most affordable place, followed by Manawatu/Wanganui and Taranaki.

Hargreaves says one of the most striking trends is the growing gap in affordability between urban centres and smaller provincial towns.

Over the past 12 months, Southland, Taranaki, Manawatu/Wanganui, Nelson and Otago.

A deterioration in annual affordability was evident in seven regions; Central Otago/Lakes [12.2%], Canterbury [10.6%], Auckland [9.1%], Waikato [4.8%], Northland [3.5%], Wellington [3.4%] and Hawkes Bay [0.7%]. On a quarterly basis the all districts national affordability index deteriorated by 4.5% compared with 2.8% improvement in the previous quarter.