Southland and Otago are the most affordable places to buy a home in the South Island but Central Otago remains one of the least affordable to live, after Auckland.
The Massy University Home Affordability Report says lower interest rates and the Reserve Bank's loan-to-value ratio restrictions are making Auckland houses more affordable.
The index showed Southland's affordability as a percentage of the national average was 51% at the end of February, the most affordable region in the country.
• Cromwell swell swallows sections
Otago was 65%. Central Otago Lakes was 148%, Canterbury and Nelson-Marlborough were both at 97%.
However, report author Susan Flint-Hartle says the modest improvement, while welcome, offered limited respite for first-home buyers in Auckland.
‘‘Despite the small improvements we've seen over the past few quarters, Auckland remains 59% less affordable than the rest of New Zealand, and that is a record high.''
The only other region more unaffordable than the national average was Central Otago Lakes at 148%, she said.
The report, which covered the three months ending February, showed many regions still fluctuating in their affordability from quarter to quarter.
Improvements in the previous three quarters in Hawkes Bay had been reversed by 6.7% in the most recent quarter.
Similarly, the 10.5% improvement in affordability for the Central Otago Lakes region in the September quarter had been almost been completely negated by falls in the past six months, Dr Flint-Hartle said.
Recent movements in affordability had largely been driven by falling or rising house prices. Auckland's median house price fell by $15,000 to $750,000 in the three months ending February but the longer-term view represented a $75,000 climb in the past 12 months.
Other regions, including Hawkes Bay and Central Otago Lakes, where house prices had increased by 10.4% and 15.4% respectively in the past quarter, showed corresponding falls in affordability.
‘‘It seems house prices in these regions are being driven by demand, created by a buoyant tourist market and a ripple effect as some Aucklanders vacate their city for a more relaxed lifestyle or to seek better investment returns.''
Lower interest rates had also contributed to the overall improvement in housing affordability and should continue to do so in the future, Dr Flint-Hartle said.
Key findings
• A 9.2% annual improvement in affordability across New Zealand continues the trend of the past three quarters.
• All regions, with the exception of Central Otago Lakes, show an improvement in the national affordability index since this time last year.
• Auckland remains the most unaffordable region in New Zealand.
• Hawkes Bay, Central Otago Lakes, Taranaki, Manawatu-Wanganui and Southland all reported a deterioration in affordability for the first quarter of 2016.
