Central Otago Lakes, including Wanaka and Queenstown, now surpasses Auckland/Coromandel as New Zealand's least affordable area for housing.
The latest Massey University Home Affordability Report shows Central Otago Lakes has now surpassed Auckland as the most unaffordable region in New Zealand.
The report, which covers the period from December 2016 to February 2017, shows an improvement in national affordability over the quarter. This has been driven by a fall in house prices in seven regions, including Auckland.
But over the last quarter, affordability declined in Central Otago Lakes by 8.2 per cent.
"This was in contrast to a considerable 7.5 per cent improvement in Auckland’s affordability and, on the Massey index, Central Otago Lakes now ranks as the country’s least affordable region," says report author Associate Professor Graham Squires from Massey’s School of Economics and Finance.
"Central Otago also has the largest decline in affordability over the 12-month period, which is a reflection of tourism industry demand in Queenstown, a shortage of housing supply, speculative investment demand, a focus on high-end lifestyle living in the area, and largely stagnant wage increases."
Auckland’s median house price dropped by $51,944 over the last quarter - or 6.1 per cent - leaving Auckland to become New Zealand’s second most unaffordable region after Central Otago Lakes.
"These two regions are the least affordable by a clear margin," Dr Squires says.
"Auckland still sits at 55 per cent less affordable than the rest of the country, and Central Otago Lakes is now 68 per cent less affordable than the rest of New Zealand."
Despite the improvement in affordability in seven regions in both the report’s annual and quarterly figures, Dr Squires says the ratio of median house price to median wage remains very high in Auckland and Central Otago Lakes.
"In our two most expensive regions this will continue to place strain on first home buyers, especially in Central Otago Lakes where the median house price is nearly 14 times the median annual wage."
Dr Squires also points out that improvements in affordability have been driven by slowing house prices and continued low interest rates - but there are indications that interest rates are on the rise.
Download the full report here.
• Nationwide, the median sales price shows a 10% year-on-year increase, although there is a 4.8% decrease this quarter.
• Seven regions surpass Auckland’s annual price increase of 6.7% - Northland (20.4%), Waikato (14.3%), Manawatu/ Wanganui (9.2%), Wellington (15.5%), Nelson/Marlborough (13.1%), Otago (17.5%) and Central Otago Lakes (30.4%).
• Evidence of a slowdown in house prices continues as seen by seven regional drops in median house prices over the last quarter - Auckland (-6.1%), Waikato/Bay of Plenty (-2.1%), Taranaki (-5.2%), Manawatu/Wanganui (-3.3%), Nelson/Marlborough (-3.4%), Canterbury/ Westland (-3.4%), and Southland (-7.9%).
• Least affordable region: Central Otago Lakes - 68% less affordable than the rest of the country.
• Most affordable region: Southland - 46% more affordable than the rest of the country.
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Wanaka Sun | 6 - 12 Apr 2017 | Edition 812