Home affordability starting to improve (4/4/2008)

The long awaited slow down in house price increases has arrived and house prices in some regions have fallen, says the latest quarterly report on home affordability from the Massey University Real Estate Analysis Unit.

The national median house price flatlined around $350,000 to November 2007 and since then has fallen by approximately four per cent according to the latest home affordability report. The affordability equation is driven by three variables - one is house prices and the other two are mortgage interest rates and wage rates, says the director of the Massey University Real Estate Analysis Unit, Professor Bob Hargreaves. The fall in the national median house price has altered the equation to give an improvement of affordability across all districts of 2.2 per cent. While a drop in house prices may be bad news for existing home owners, it is good news for first home buyers, says Professor Hargreaves.

Over the quarter ending in March, eight of the 12 regions showed improvements in affordability as follows: Northland at 7.1 per cent, Wellington and Southland both 5.5 per cent, Auckland 5.2 per cent, Taranaki 3.8 per cent, Hawkes Bay 2.1 per cent, Otago 2.0 per cent, and Manawatu/Wanganui 0.4 per cent. All other regions showed declines.

However affordability still declined in some regions led by Central Otago Lakes region at 23.3 per cent, followed by Nelson/Marlborough 5.6 per cent, Waikato/Bay of Plenty 2.7 per cent and Canterbury/Westland 1.1 per cent.

Southland is still the most affordable place in the country for house buyers followed by Otago and then Manawatu and Wanganui. Central Otago Lakes is by far the least affordable region, followed by Auckland region then Nelson/Marlborough.

Note: This story has been adapted from a news release issued by Massey University

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