Skip to content

Auckland now has least affordable housing market in New Zealand, according to new data

In the past quarter, homes slipped further out of reach of buyers in Auckland while in Central Otago Lakes, which previously held the top spot, affordability improved.
The University’s home affordability index, which is calculated using the key drivers of interest rates, wages and house prices, shows that nationally, affordability fell 1.9% in the past quarter as the national median house price went up by 3%.

Report compiler Professor Bob Hargreaves, from the University’s School of Economics and Finance, said that in view of the financial turmoil in Europe it is surprising that house prices are increasing in several regions, Auckland in particular.

‘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,’ he explained.

Over the past quarter, four of the 12 regions showed improvements in affordability; Otago/Lakes up 9.9%, Waikato/Bay of Plenty up 4%, Northland up 2.4% and Southland up 0.9%.

Affordability deteriorated in Hawkes Bay by 11.4%, in Auckland by 5.8%, in Manawatu/Wanganui by 4.8%, in Wellington by 3.3% in Canterbury/Westland by 2.6%, in Nelson/Marlborough by 2.4%, in Otago by 0.3% and in Taranaki by 0.1%.

Annually, the all districts’ national affordability index improved by 9.1% compared with 8.4% in the previous period. All 12 regions showed improved annual affordability.

Auckland's largest real estate chain Barfoot & Thompson confirmed that prices are rising in the city. Auckland's average house prices increased by 1% in December to reach $573,071, the second highest average sales price for the year.

Peter Thompson, managing director , said volumes were up too after 714 houses were sold, the best December in five years. Volumes were also more than a third higher than in December 2010, he said.

‘December was extremely active and it has given early momentum to January's market. In part, the strong finish to the year was assisted by there being three full weeks of trading leading up to Christmas,’ said Thompson.

But he added that although December was an excellent sales month, overall the Auckland market remains restrained. House prices are increasing only modestly, with the difference between the average price achieved for all of 2011 at $543,124 just 2.5% higher than 2010.