House prices cooling but affordability worsens by 9.6 per cent for the year (1/16/2008)

The rate of house price increases slowed over the second half of last year and the latest Massey University Home Affordability report says there are indicators prices will continue to cool.

The report for the fourth quarter of the year says there are classic signs of a slowing in the rate of price increases - houses taking longer to sell, falling volume of transactions and an increase in the number of houses listed for sale that remain unsold. The median house price of $350,000 in May had risen just 0.57 per cent to $352,000 by November.

Nationally there was a 9.6 per cent deterioration in affordability for the year, compared with 2006.

Central Otago/Lakes is the least affordable place to buy a home, followed by Auckland and Nelson/Marlborough. Southland leads as the region where homes are most affordable followed by Otago and Manawatu/Wanganui.

On a regional basis affordability improved over the quarter in Central Otago/Lakes (by 9.6 per cent), Northland (1.7 per cent) and Otago (0.4 per cent). Waikato/Bay of Plenty was static over the quarter. All other regions showed declines in affordability. Leading the quarterly declines in affordability were Southland (22.2 per cent), Manawatu/Wanganui (9.9 per cent), Taranaki (9.1 per cent) and Wellington (5.3 per cent). Smaller declines were registered in Canterbury/Westland (3.0 per cent), Hawke's Bay (2.4 per cent), Northland 1.7 per cent) and Auckland (1.0 per cent).

Based on annual data, Otago showed a slight improvement in affordability but all other regions showed declines in annual affordability. The biggest decline was in Southland ( 39.7 per cent), Manawatu/Wanganui (14.0 per cent), Canterbury/Westland (12.2 per cent), Wellington (11.2 per cent), Central Otago Lakes (10.9 per cent), Northland (9.3 per cent), Auckland (8.6 per cent), Waikato/Bay of Plenty (7.5 per cent), Hawke's Bay (5.9 per cent), Taranaki (4.8 per cent), Nelson/Marlborough (1.8 per cent).

Key Points:

• House price increases moderate in the second half of 2007
  
  
• 9.6 per cent deterioration in the all districts affordability for the last year
  
  
• Southland shows 37.9 per cent deterioration in affordability over the year.

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

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