Housing affordability gap stretches

The gap between housing affordability in Auckland and the rest of the country is now the widest it has been in the 25-year history of the Massey Home Affordability Report.

The latest report, released yesterday, underlined New Zealand's two-track housing experience, report author Prof Paul Gallimore, from Massey's School of Economics and Finance, said.

Figures for the three months ended February showed an improvement in affordability across New Zealand of 6%.

However,

Auckland and three other regions - including Otago - bucked the trend.

In the past year, the 10.4% fall in affordability had been driven by a modest 3.6% rise in house prices and a 0.5% rise in interest rates, which outstripped the 2.3% increase in the average weekly wage.

But the situation in Auckland was quite different, he said. Wages in Auckland rose less than the national average while the median house price rose by a substantial 14%, or $83,000.

''The recent improvement in affordability in many regions really accentuates the high costs in Auckland.

'' Our largest city is now 49% less affordable than the rest of the country and that's a larger gap than we've had at any other time in the 25-year history of the Massey Home Affordability Report.''

Prof Gallimore said the divergence in regional experience was likely to continue throughout 2015.

While house prices were dropping in some regions, that was not the case everywhere, most notably in Auckland.

Whether Auckland's affordability continued to move apart from the rest of New Zealand would hinge on how supply and demand factors played out in the market. However, the answer was likely to be yes, he said.

The regions which had an improvement in affordability in the past three months were: Central Otago-Lakes (-10%), Manawatu/Wanganui (-5.4%), Waikato (-4.8%), Canterbury (-4.5%), Southland (-3.7%), Wellington (-2.4%), Hawkes Bay (-0.7%) and Northland (-0.5%).

In all but one of the regions where affordability eased, falling house prices were the cause. The exception was Northland, where a $10,000 (3.1%) rise in price was outweighed by a 4.3% quarterly jump in wages.

In regions with deteriorating affordability, three-month house price rises outpaced corresponding wage changes, the report showed.

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