Falling affordability the norm
Friday 26 January 2018
Housing affordability nationwide is on the decline again, with Wellington recording one of the sharpest drops in affordability.
By The Landlord
The latest Massey University Home Affordability Report shows the September to November 2017 quarter saw an overall decline of 0.4% in national affordability.
Nearly all regions experienced a decline in affordability over the past year, with only Hawke’s Bay and Nelson/Marlborough showing slight improvements over the most recent quarter
The decline in affordability was largely driven by the ongoing increase in median house prices.
Median prices in all regions were up over the last year, while prices grew in every region except Central Otago Lakes in the last quarter.
The biggest declines in affordability this quarter were in Taranaki (at 9.8%) and Wellington (at 8.6%), which saw the largest quarterly median house price increase ($48,000).
Massey University associate professor Graham Squires says the data shows the fall in house prices in many regions in the June to August 2017 quarter hasn’t continued.
“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.”
Rising house prices continue to impact on Auckland’s affordability, with the city’s median price now 13.5 times annual wages.
This means Auckland is now 53% less affordable than the rest of New Zealand, but it is not the least affordable region in the country.
That dubious honour goes to Central Otago Lakes, even though the region’s median house price dropped by $3,500 in the last quarter.
Squires says the small drop in price will not bring much relief to those looking to purchase a house in the region.
“Central Otago Lakes, which includes Queenstown, is still the most unaffordable region in New Zealand.
“It’s 69% less affordable than the rest of the country and the median house price there is now 15 times annual wages.”
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 Massey survey results come hot on the heels of the latest annual Demographia International Housing and Affordability Survey, which was released earlier this week.
That survey also highlighted the issue of declining housing affordability in New Zealand, but the data in the Massey survey is more recent than the data used in the Demographia survey.
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