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The $67,000 decline to $708,000 in the Central Otago Lakes area, encompassing Queenstown and Wanaka, is the first time affordability in the area has improved since August last year.
Anecdotally, the younger workforce in lower-paid hospitality and tourism jobs around Central Otago causes the large disparity, when measured against the region's high house prices.
Massey University's latest Home Affordability Report by Associate Professor Graham Squires revealed a decline in national affordability, but New Zealand's least-affordable region was bucking that trend - though not enough to change its status.
''Central Otago Lakes continues its reign as the least affordable place to live, at 51% less affordable than the rest of New Zealand,'' he said.
Auckland was some way behind, at 43% less affordable than the rest of the country.
He said improvements in affordability had appeared to be in many high-value markets around the country.
''The slowdown and improvements in affordability in high-value areas may be associated with a saturated market in these regions,'' Dr Squires said.
However, he cautioned that the Central Otago Lakes region was ''quite volatile'', and had experienced an increase in median house price of $50,000 during the previous quarter.
''This quarter's report shows large regional variation, with five out of 13 regions showing affordability improvements, including the high-value markets of Central Otago Lakes and Auckland.''
Recent data from the Real Estate Institute of New Zealand (REINZ) showed that in May Queenstown prices were down 7% on a year ago to $820,000 and Wanaka's rose 0.5% to $865,000, while Quotable Value data for May showed Queenstown values had risen 9.6% to $1.15 million.
Another report last month from the REINZ noted Queenstown was the only region outside Auckland considered unaffordable for typical first-home buyers on median incomes, as a lower-quartile priced home would cost more than 40% of their take-home pay.
Dr Squires' data is based on comparing average weekly earnings with the median dwelling price and mortgage interest rates.
He said the high-value regions may be showing affordability improvements, at the expense of lower-value regions.
''Outside of traditionally overheating markets like Auckland and Queenstown, regions with lower relative values like the Manawatu may be showing improvements as investors seek houses in regions that might yield greater returns on capital.''
Central Otago Lakes showed the largest rise in affordability, at 11.5% over the last quarter, followed by Hawke's Bay at 8.1%.
Northland showed the largest decline in affordability, at 7% for the most recent quarter, due to a median house price increase of $27,000, followed by affordability declines in Manawatu-Whanganui, at 6%, and Otago, at 4%; the latter being separate from Central Otago Lakes.
Dr Squires said Southland, Taranaki and Manawatu-Whanganui remained the country's most affordable regions at respectively 54%, 43% and 41% more affordable than the rest of New Zealand.