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Auckland no longer least affordable

Think Auckland has the most unaffordable housing in New Zealand? Think again. It’s now the Central Otago Lakes region.

Thursday, April 6th 2017, 2:00PM

by Miriam Bell

Massey University’s latest Home Affordability Report is now out and it shows that Central Otago Lakes has surpassed Auckland as the most unaffordable region in New Zealand.

Affordability in Central Otago Lakes declined by 8.2% in the quarter from December 2016 to February 2017 as house prices in the area rose by 30.4%.

In contrast, Auckland’s median house price dropped by 6.1% ($51,944) over the quarter, which led to a 7.5% improvement in its affordability.

The report author, Massey University associate professor Graham Squires, said Central Otago also had the largest decline in affordability over the 12-month period.

“This 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.”

However, Central Otago Lakes and Auckland remain the two least affordable regions of New Zealand by a clear margin, he said.

“Auckland still sits at 55% less affordable than the rest of the country, and Central Otago Lakes is now 68% less affordable than the rest of New Zealand.”

Further, Squires said 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.”

National affordability improved over the quarter. This was driven by a fall in house prices in seven regions, including Auckland.

Squire said 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.

It was important to note that that the quarterly interest rate used to calculate the index is a weighted average of all loans and that is currently at 4.85%, he said.

“New customers’ rates for January are now much higher – generally between 5% and 6%, depending on the type and term of the loan.

“It is possible more stringent deposit and bank lending requirements and interest rate rises could make it more difficult for home buyers in the future.”

Read more:

Super City affordability slides further 

Auckland affordability a credit negative – Moodys 

« Apartment attraction on the riseFree Investment Property Showcase Events: Auckland, Wellington and Christchurch »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

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