New Zealand housing is becoming less affordable as rising wages are not enough to offset climbing house prices and interest rates, says Massey University’s latest quarterly home affordability report.
The national affordability index fell 11.4 per cent in the year ended August 31, the report says.
It found the annual average weekly wage increase of $28.06 was outpaced by a $30,000 rise in median house prices and the average mortgage rate increasing to 5.86 per cent from 5.52 per cent.
“Indications are affordability will remain difficult for the remainder of 2014 and into 2015,” the report said.
“The average interest rate is likely to continue to increase as borrowers roll over their mortgages.”
Nine out of 12 regions became less affordable on an annual basis, led by Auckland, which remained the least affordable region, with a deterioration in annual affordability of 14.4 per cent to an index reading of 138.6.
Central Otago/Lakes was the next most unaffordable region, deteriorating 8.9 per cent to 119.3, followed by Canterbury, where annual affordability deteriorated by 11.7 per cent for a reading of 98.8.
Southland deteriorated 9.4 per cent, but remained the country’s most affordable region with a reading of 51.4.
Wellington, Waikato, Otago, Hawkes Bay and Nelson/Marlborough all became less affordable in the year, Massey said.
Manawatu/Wanganui improved in affordability by 2.7 per cent for an index reading of 58.2. Taranaki improved 1.2 per cent to 61.2 and Northland improved 0.2 per cent to 79.5.