Auckland home to NZ's least affordable houses
Auckland is the least affordable region of New Zealand to buy a house, according to the latest home affordability report by Massey University.
Auckland homes stretched a further 5.8 per cent out of the reach of house hunters in the quarter to November 2011, while affordability improved in Central Otago Lakes, bumping it off the top spot.
On a national level, affordability dropped 1.9 per cent in the past quarter, and the national median house price went up by 3 per cent.
Report compiler Professor Bob Hargreaves from Massey University's School of Economics and Finance said in light of financial turmoil in Europe, it was surprising that house prices were increasing.
''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 said.
He also noted that the New Zealand economy was insulated from the Europe crisis somewhat by its links with Australia and China.
''Our Aussie banks are pretty solid compared to some of those European ones.''
Despite the dip from the last quarter, homes were still more affordable across the board than in the same quarter in the previous year.
All 12 regions showed annual improvements, led by Wellington with 15 per cent, Waikato/Bay of Plenty with 13.7 per cent and Southland with 11.8 per cent.
But over the past quarter, just four of the 12 regions showed improvements; Otago/Lakes at 9.9 per cent, Waikato/Bay of Plenty at 4.0 per cent, Northland at 2.4 per cent, and Southland at 0.9 per cent.
Affordability deteriorated most dramatically in Hawke's Bay by 11.4 per cent, in Auckland by 5.8 per cent, in Manawatu/Wanganui by 4.8 per cent and in Wellington by 3.3 per cent.
The home affordability index, which is released each quarter, is calculated using the key drivers of interest rates, wages and house prices.
Hargreaves said the annual increase in affordability was explained by rising wages, dropping interest rates and softening house prices.
''That's probably why you got more first home buyers ... particularly with the low interest rates, they figure now is a good time to jump in.''
But he said the outlook for affordability was probably not going to improve, as interest rates would rise again in the long term.
''The economists are saying New Zealand house prices are overvalued, but the evidence is they're going up - and certainly in places like Auckland.''