Wellington housing affordability slips

JASON KRUPP
Last updated 11:58 09/10/2012

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Housing affordability in Wellington has deteriorated in the last three months, even as the majority of districts across the country saw improvements.

That's according to the latest Massey University Home Affordability Report, which found the capital's rating slipped 1.4 per cent in the period when factoring in wage growth, housing prices and mortgage costs.

Other regions that chalked up drops in quarterly affordability were Northland with a 3.7 per cent decline, Southland at 0.5 per cent and Canterbury/Westland at 0.3 per cent.

The figures fly against an improvement in overall affordability across the country, with the index improving 4.3 per cent in the quarter, versus a 2.8 per cent improvement in the preceding three months.

That was due to the $6.25 increase in the average weekly wage and further declines in monthly mortgage costs outstripping the $1000 rise in median home prices over the period.

The Manawatu/Wanganui region saw the biggest jump in quarterly affordability, with a 9.4 per cent improvement, followed by Hawkes Bay and Waikato at 8.4 per cent and 4.9 per cent respectively.

Still, it wasn't all bad news for the Capital.

On an annual basis, affordability in Wellington improved by 1.8 per cent compared to the same quarter last year, although that was shy of the 4.9 per cent country-wide improvement.

Auckland was the single exception, with affordability decreasing 0.4 per cent compared to August quarter last year.

"House prices in Auckland are increasing faster than other regions due to the imbalance of new supply to meet demand from the increasingly population," said Bob Hargreaves, director of Massey's Real Estate Analysis Unit.

"In the short run, while interest rates stay low and builders aren't building, house prices will continue to rise in Auckland."

Floating mortgage rates from most major banks are currently sitting at about 5.75 per cent, and two-year fixed rates start at about 5.25 per cent.

Waikato, Bay of Plenty, and Otago saw the biggest year-on-year improvements in affordability, both at 12.8 per cent, followed by Manawatu/Wanganui at 11.1 per cent.

Only the Central Otago/Lakes district beat Auckland in the least affordable housing stakes, with an index ranking of 134.6 per cent versus the national average, although affordability had been improving of late. Auckland scored 129 per cent.

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- The Dominion Post

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