Staff Reporter –
info@indiannewslink.co.nz
Auckland and Central Otago Lakes continue to top the Massey University Home Affordability Report Index by a considerable margin, according to a report.
It said that the two cities recorded respectively 62% and 61% less affordable than the rest of New Zealand.
“The margin of difference between these two regions and the rest of the country is reaching unprecedented levels,” the Massey University Report said.
Massey University Senior Property Lecturer Susan Flint-Hartle, who wrote the Report, said that demand continues to drive median house prices up, making entry into the Auckland market a challenge.
New High in Auckland
“Auckland has hit a new high median for this quarter of $842,500 in August, which represents a 13.85% increase, or over $100,000, over the past 12 months. The median house price in Auckland is now 13.5 times median annual household income, which will continue to place strain on first home buyers in our largest city,” she said.
The Report, which covers the three-month period from June 2016 to August 2016, also shows that affordability in Central Otago Lakes has declined by nearly 21% over the past year – the largest drop for any region in New Zealand.
“The decline in affordability in Central Otago Lakes is exacerbated by the booming tourism industry putting stress on the supply of affordable housing,” Dr Flint-Hartle said.
While most of the country, including Auckland, has shown modest improvements in affordability over the 12-month period largely due to steady reductions in the Official Cash Rate (OCR), the Waikato/Bay of Plenty region has joined Otago Central Lakes in becoming less affordable over the same period.
Waikato worse off
“The Waikato is 4.7% worse off than one year ago, despite considerably lower borrowing costs. Worsening in affordability here can be attributed to a spill-over from Auckland as those locked out of the Auckland market look to areas closely connected to the city,” Dr Flint-Hartle said.
She said that while increases in house prices in many regions are significantly outstripping wage growth, reductions in the OCR are easing the burden for home owners to some extent.
“This, of course, is not much comfort for first home buyers keen to buy in our two most expensive regions. They are facing more stringent deposit requirements, markets characterised by intense competition and a lack of supply.
“Cheaper borrowing also holds the potential to push house prices higher if demand for housing continues to grow. This could lead again to a deterioration in housing affordability as we move into the summer period,” she said.
Least affordable region: Auckland – 62% less affordable than the rest of the country.
Manawatu/Whanganui was the most affordable region. It was 54% more affordable than the rest of New Zealand.
