Nelson houses cost a bomb
Nelson is one of the least affordable regions in the country, says a new report.
Massey University's latest home affordability report released yesterday puts Nelson/Marlborough's house prices at 103.1 per cent of the national average, making it one of the least affordable areas in the country.
Affordability had declined by 1 per cent in the last year.
Only Auckland, at 135 per cent of the national average, and Central Otago Lakes, at 122 per cent of the national average, were less affordable.
Nationally, the affordability index had actually improved by 1.47 per cent during the quarter ending August 2013.
The figures do not cover more recent house price increases or the growing tendency for banks to charge higher interest rates for buyers with low equity.
The report's author, Bob Hargreaves, said the Nelson/Marlborough region had always been one of the least affordable areas, partly due to its popularity as a retirement destination.
Housing affordability was calculated using the average interest rate, average wages, and average house prices.
In Nelson and Marlborough, wages were relatively low and houses were relatively expensive.
"For example, across the ditch in Wellington the average weekly wage rate is about $1160; in Nelson/Marlborough it's $965."
He expected the new lending rules brought in by the Reserve Bank would hurt first-home buyers, pushing them out to cheaper properties at the periphery of the main centres, but the extent of the impact on the wider market was hard to predict.
Most of the people in the market would already have property, particularly retirees, and so would be in a better position than first-home buyers.
The Massey data is in line with the most recent Roost Home Affordability Report, from August, which showed it took 61.4 per cent of one median income to pay the mortgage on a median priced house in Nelson.
This was up from July's 54.1 per cent, and up from 51.8 per cent in August 2012.
Nelson Tasman Housing Trust director Keith Preston said Nelson had consistently ranked in the top three least affordable regions since the turn of the century.
His organisation had consistent demand for housing, with its 32 houses full and with waiting lists.
Over the next six months the organisation would be building another four houses, and was hoping to build more after that. But there was not much money to go around, with a lot of funding going to Auckland and Christchurch.
"There's a constant pressure, it's been like that for 12, 13, 14 years or more. It's like trying to turn around a cruise ship - you can work away at it for years and eventually something will start to happen, but it isn't going to happen overnight.
"But unfortunately people's housing problems are usually short-term or instant. You suddenly find yourself homeless, or you need to be here but can't afford it."
Housing unaffordability could lead to wider problems for the area, such as school shortages.
- © Fairfax NZ News