Decreases in house prices and in modest income growth mean home affordability has improved in recent months.
The latest Massey University Home Affordability Report shows an improvement in national affordability over the most recent quarter, driven by modest decreases in house prices and modest income growth.
The report, which covers the quarter from December 2018 to February 2019, shows median house prices across the country decreased by 3.4 per cent in aggregate. This, combined with an increase in incomes in many regions, has seen national home affordability improve by 4.4 per cent.
National house price-to-income ratios have also improved, with house prices moving from 9.2 back to 8.8 times annual wages.
Report author David White.
Fluctuating affordability continues
Report author, David White from the Massey University Real Estate Analysis Unit, says the results show home affordability in New Zealand continues to fluctuate from quarter to quarter.
“This quarter we have seen an improvement in affordability, while the previous quarter showed a decline,” he says. “If we take an annual view, however, there’s an almost static result for the country as a whole.”
He says that while national affordability has barely changed over the past 12 months, the results mask significant regional changes in both directions.
“Within this aggregate result, there are some large regional changes, including a 6.9 per cent improvement in affordability for the West Coast over the past year, and a 19.3 per cent decline in affordability for Gisborne.”
More granular regional data
The latest Home Affordability Report uses revised regional classifications to remain in line with those used by the Ministry of Business, Innovation and Employment and the Real Estate Institute of New Zealand.
While this means direct comparisons with previous reports are not possible, quarterly and annual comparisons have been calculated in the latest report based on the revised regional classifications.
“The latest report has unearthed some more granular insights because the data is now broken down into 16 regions rather than 12,” Mr White says.
“For example, Waikato, Bay of Plenty and Gisborne are now classified as three separate regions, and this has highlighted significant declines in affordability for Gisborne over both the quarterly and annual time periods.”
The new regional data puts Auckland as the country’s most unaffordable region, while the West Coast, which is now broken out from the Canterbury region, as the country’s most affordable region.