Auckland least affordable housing region

Potential buyers looking at purchasing Auckland property may need to re-evaluate their options as affordability levels in the region sink.

According to the latest home affordability report from Massey University, Auckland overtook Central Otago Lakes in the past quarter as the least affordable region to buy a house.

The all districts’ national affordability index, calculated using the median of dwelling prices, wages and average monthly interest rates, improved by 9.1% annually compared to 8.4% in the previous period where all twelve regions showed improved annual affordability. 

This improved index shows that although certain regions continue to lose sustainable affordability levels, the remaining regions with more positive levels are recouping for the potential decrease in the national average, improving the index by 9.1% annually.

Regional annual improvements were led by Wellington (15.0%), Waikato/Bay of Plenty (13.7%), Southland (11.8%), Manawatu/Wanganui (11.1%), Taranaki (11.1%), Northland (11.0%), Otago/Lakes (9.7%), Nelson/Marlborough (8.5%), Auckland (8.1%), Hawkes Bay (5.6%), Canterbury/Westland (3.7%), and Otago (3.4%).

Auckland with an index of 126.9% of the all districts national index (100%) became the least affordable region, with Otago/Lakes (formerly the least affordable region) at 123.2%, followed by Nelson/Marlborough at 100.3%.

Southland has kept its place as the most affordable region with an index of 57.1% of the national average, with Manawatu/Wanganui in second place at 69.7%, followed by Otago in third place at 71.5%.

Bob Hargreaves, professor at the university’s School of Economics and Finance, says in view of Europe’s financial instability it is surprising that house prices continue to increase in several regions with Auckland topping the list.

“However, very low mortgage interest rates combined with more relaxed lending criteria are combining to bring more buyers into the market and new construction is still at a very low ebb,” says Mr Hargreaves.

Auckland homes fell an additional 5.8% out of reach of potential homebuyers in the quarter to November 2011, whilst Central Otago Lakes improved in affordability to move it from the top of the list.

Nationally, affordability levels dipped by 1.9% in the past quarter as the national median house price rose by 3%.

The data compiled for the university’s home affordability index is calculated using key drivers including house prices, wages and interest rates.

Out of the twelve regions over the past quarter, four of these regions showed improvement in affordability including Otago/Lakes (9.9%), Waikato/Bay of Plenty (4.0%), Northland (2.4%), and Southland (0.9%).

Deterioration in affordability levels were found in the remaining eight regions including Hawkes Bay by 11.4%, Auckland (5.8%), Manawatu/Wanganui (4.8%), Wellington (3.3%), Canterbury/Westland (2.6%), Nelson/Marlborough (2.4%), Otago (0.3%), and Taranaki (0.1%).