CO-Lakes house price now 15.4 times average annual wage

Central Otago Lakes remains the most unaffordable region for housing in the country, with median prices now more than 15 times annual income.

A Massey University home affordability report has found the region, made up of the Central Otago and Queenstown Lakes districts, was one of only three in New Zealand where home affordability  got worse in the three months to February.

In the 12 months to February,  all regions  became more unaffordable except for Canterbury-Westland.

The report’s author, Associate Prof Graham Squires, said fluctuations in median house prices were the main driver of changes in affordability.

The median house price in Central Otago Lakes rose $53,500 in the three-month period,  Dr Squires said.

"The region’s median house price is now 15.4 times its average annual wage, compared to Auckland, where house prices are 13.1 times annual wages."

However, Harcourts Queenstown managing director Kelvin Collins said the affordability ratio was distorted by the Queenstown Lakes district’s unusual demographics.

Although its housing was expensive, he estimated one in four workers were low-wage employees in the tourism industry who  were not in the market to buy a house but to "have a bit of fun and then get out".

For the permanent population, whose average income was much higher, the housing affordability issue was less acute.

For those struggling to get on the property ladder, Mr Collins did not see any light on the horizon in the next two years because of the limited supply of new sections and apartments.

"Because we’ve got no new supply, prices can’t go anywhere but up at the moment."

Queenstown Lakes Mayor Jim Boult said the numbers were no  surprise, and his council was focused on addressing the issue.

A mayoral task force released a report into the issue last October, setting a goal of building 1000 affordable houses in the district by 2028.

His council was now focused on how to "break down the barriers in the way of getting this done in a hurry".

"To be quite frank about it, the thing that wakes me up at two in the morning is how we get ordinary families into houses in our district."

Special housing areas legislation continued to be a useful tool, and he was finding Housing Minister Phil Twyford "enormously good to work with".

"I think we can rely on Government helping us where they are able to."

The council was preparing business cases for interest-free loans from the housing infrastructure fund, set up by the previous government, for four proposed housing developments in the Wakatipu.

Ngai Tahu was negotiating with the Government over a redevelopment of the former Wakatipu High School that would include a "significant number of affordable dwellings", and he expected to see an agreement reached before the end of the year.

Also unsurprised by the report’s findings is Central Otago deputy mayor and Cromwell ward councillor Neil Gillespie.

He  said although the district’s existing homeowners would be pleased the equity in their properties was rising, those wanting to enter the property market faced a challenge.

"If you’re a 26-year-old with a partner looking to get into your first house, it isn’t easy."

The CODC  was working on establishing a community housing trust, based on the Queenstown Lakes model, to help those residents.

The Central Otago district’s median price was $499,000 in February, up from $407,000 a year earlier. In  Queenstown Lakes, the median  was $913,000 in February, up from $860,000 12 months earlier.

 

Buying in Central Otago-Lakes

House price to income ratio in Central Otago Lakes region is 15.4, the highest of any region in New Zealand

• Home affordability is calculated by comparing households’ average weekly earnings with the median dwelling price and the mortgage interest rate

• A multiple of three or less is seen as a good marker of housing affordability.

Comments

And unfortunately not a single suggestion to raise wages to alleviate the issue.

 

 

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