Housing Minister Nick Smith says there's no housing crisis in
Auckland or Christchurch.
His comments come as a new report indicates housing
affordability improved slightly in the last quarter.
The Home Affordability Report by Massey University's real
estate analysis unit found housing affordability improved by
1.47 per cent during the quarter to August.
Its calculations were based on median house prices, average
mortgage interest rates and average wage rates.
It followed a $2000 reduction in the national median house
price, a 72 cent increase in the average wage rate and a
reduction in the average mortgage interest rate from 5.57 to
5.52 per cent.
Regionally, Auckland, Wellington, Central Otago/Lakes,
Southland, and Canterbury/Westland showed improved
affordability over the quarter, while affordability declined
in Hawke's Bay, Manawatu/Wanganui, Otago, Taranaki and
However, when viewed annually Auckland's housing
affordability still deteriorated, and the city is still the
nation's least affordable region, the report finding it was
35 per cent less affordable than the national average.
The report's author, Professor Bob Hargreaves, did not
anticipate the downward trend to continue.
"If you take into account the comments of the Reserve Bank
Governor recently about interest rates increasing, you could
say there are some headwinds on the horizon," he said.
"The outlook for affordability is a bit grim, I'm afraid."
Dr Smith said he didn't put too much weight on a single
quarterly measure of housing affordability, "although I do
note that it has improved substantially since housing
affordability reached its all time low in 2008 under the
previous Labour Government".
He said the Government was committed to addressing housing
affordability, particularly in Auckland and Christchurch, but
did not accept there was a crisis.
"I don't accept that there is a crisis and the duplicity of
parties like Labour is exposed when the affordability index
was a whole lot worse in 2008 and they rejected any notion of
there being a crisis then," he said.
"The Government's solid work programme on housing
affordability is based on the comprehensive report of the
Productivity Commission and has work underway on all of the
five substantive issues from land supply to material costs to
the development levies and infrastructure cost, to improving
productivity in the building sector, as well as on the
significant compliance cost."
The Labour Party's housing spokesman Phil Twyford said Dr
Smith was "deluded".
"After five years in Government house prices in Auckland have
gone up 13 per cent in last 12 months, thousands of first
home buyers are locked out of the housing market by home
mortgage lending limits and interest rates are heading north
of 8 per cent. I'd call that a crisis."
Mr Twyford said the quarterly report was not an indication
that affordability was improving and he was particularly
apprehensive about the effect of mortgage lending
"What these lending limits are doing are driving first home
buyers out of the market, which is going to basically depress
levels of home ownership, which is exactly the opposite what
the Government should be trying to achieve at the moment."
Median dwelling prices by region in August 2013
Central Otago Lakes $385,000
New Zealand total $390,000
Source: Real Estate Institute of New Zealand