Housing affordability nationally fell 3.3% in the latest quarter, bringing the annual decline to 24.4%, according to the latest AMP Banking/Massey University report.
The biggest factor in both the quarterly and annual declines is rising house prices. AMP notes the median house price rose 5.4% in the quarter and 10.7% in the year.
The survey follows ASB Bank’s one showing an increasing number, although still a minority, are saying this isn‘t a good time to buy a house.
AMP says interest rates changed little during the latest quarter while wage rates rose 2%, not enough to offset the rise in house prices. Annually, wage rates rose 4%.
Nine of the 11 regions surveyed experienced a decline in affordability in the latest quarter, with Southland, down 17%, showing the worst fall followed by Otago, down 15.2%.
In the key Auckland market, home affordability only fell 3.8% in the quarter, but chalked up the second highest annual decline, down 28.9%, behind only Nelson/Marlborough where affordability was down 29% from a year ago.
Only two regions showed improved affordability in the quarter, Northland, up 3.9%, and Manawatu/Wanganui, up 2.2%.
All regions experienced an annual decline in affordability with Taranaki, down 9.7%, the only single-digit decline. AMP says it’s the first time in 18 months that all 11 regions have recorded an annual decline in affordability.
Massey prepares this quarterly report for AMP Banking combining data on house prices, mortgage rates and average weekly earnings.
Graham Crews, senior lecturer in real estate at Massey, says most residential markets continue to benefit from the strongly performing domestic economy, high immigration levels and jobs growth. He doesn’t think a slowdown is likely in the immediate future.
