Source: Massey University
Dr Arshad Javed
Professor Graham Squires
The latest Massey University Home Affordability Report shows an overall decline in national affordability over the most recent quarter. This was largely driven by soaring house prices and income levels dropping in the majority of the regions as well as nationally, by three per cent.
The report, which covers the quarter from February 2021 to May 2021, shows median house prices across the country increased by 5.1 per cent in aggregate. This, combined with a decrease in incomes in many regions, has seen national home affordability decline by 6.8 per cent. National house price-to-income ratios have also deteriorated, with house prices moving from 11.4 to 12.4 times annual wages.
Report authors, Dr Arshad Javed and Professor Graham Squires from the Massey University Real Estate Analysis Unit (REAU), say the results show home affordability in New Zealand continues to fluctuate from quarter to quarter.
“This quarter we have seen a decline in affordability, while the previous quarter showed an improvement,” Dr Javed says. “If we take an annual view, there’s a solid decline in affordability at a national level of 10.1 per cent, reflected in 13 of the 16 regions.
“At the national level, median house prices have increased moderately by 5.1 per cent, or $40,000 for the quarter. The greatest increase in median house prices was in Tasman at 13.3 per cent or $100,000. Most of the regions, 12 out of 16, showed an increase in house prices this quarter,” Dr Javed says.
While national affordability has changed over the past year, the results mask significant regional changes in both directions.
“Within this aggregate result, there are some large regional changes, including a 29.6 per cent decline in affordability for Manawatū/Whanganui over the past year, and a 23.6 per cent and 21.2 per cent decline in affordability for Hawke’s Bay and Taranaki respectively,” Dr Javed says.
The latest Home Affordability Report uses revised regional monthly employment indicator (MEI) data provided by Statistics NZ. The quarterly measure based on the MEI uses the middle month of the quarter.