Auckland continues to break affordability records
massey-university
Thu Jul 02 2015 12:00:00 GMT+1200 (New Zealand Standard Time)
Auckland continues to break affordability records
Thursday, 2 July 2015, 11:02 am
Press Release: Massey University
Auckland continues to break affordability records
The latest Massey University Home Affordability Report shows that homes in Auckland are now 56 per cent less affordable than the rest of the country – the second consecutive quarter that margin has reached record levels.
“Last quarter we reported that the margin by which Auckland’s unaffordability exceeded the whole country had – at 49 per cent – reached its widest in the history of the Massey Index,” says Massey University senior property lecturer Dr Susan Flint-Hartle. “Well, the most recent quarter shows that trend is only continuing.”
The report, which covers the period from March 2015 to May 2015, shows that home affordability in Auckland declined by 10.2 per cent over the quarter and by 25 per cent over the previous 12 months.
In stark contrast, eight of the country’s 12 regions actually showed improvements in affordability over the last quarter – but these improvements could not outweigh what the report calls the “Auckland effect”. The quarterly decrease in affordability across New Zealand was 5.4 percent, while the annual figure now stands at 11.3 per cent.
Dr Susan Flint-Hartle says movements in house prices were the driving force behind both the declines and increases in affordability across the regions.
“House prices actually fell in six of the eight regions that showed improvements, while house prices increased in all four of the regions that showed affordability declines,” she says. “But amongst these four regions, Auckland stands out because its average house price increased by $74,000 over the quarter.”
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The report says the recent reduction in the Official Cash Rate, when fed through into lending rates, should ease mortgage costs in the short term. But the impact on overall affordability in the Auckland market remains hard to predict.
“A reduction in the cost of borrowing will provide welcome relief for many home owners, especially those with heavy mortgage payments,” Dr Flint-Hartle says. “Some people entering the market may be encouraged to commit at a deeper level but there is little to suggest even more impetus in the growth of house prices than we are already seeing, at least in the short run. I feel it’s ‘no change and progress as usual’.
“A number of market participants with equity and considerable resource are unaffected by minor interest rate movements and it is this group that continues to drive demand for the limited number of properties available in the Auckland market.”
Download the full Massey University Home Affordability Report with regional breakdown here: http://bit.ly/home-affordability-june2015
Key findings:
• Quarterly deterioration in national affordability of 5.4%.
• Annual deterioration in national affordability of 11.3%.
• Canterbury/Westland was the only region to improve over the past 12 months.
• Eight regions show improvements in affordability over the last quarter.
• Auckland’s unaffordability relative to the whole country continues to grow.
Most affordable region: Southland – 54% more affordable than the national average.
(However, Southland’s affordability has declined by 21.2% over the past year).
Least affordable region: Auckland – 56% less affordable than the national average.
ENDS
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