Results of the latest Massey University Home Affordability study have been released. While the report shows that affordability has deteriorated over the last 12 months, the level of deterioration is likely to be a surprise to many.
The average annual weekly wage increase of $28.06 was not enough to offset a $30,000 increase in the national median house price and an increase in the average mortgage interest rate from 5.52% to 5.86%. Overall, the national affordability index deteriorated by 11.4% during the twelve months ending August 2014.
Three of the twelve regions actually had improved affordability. These were Northland (0.2%), Taranakai (1.2%) and Manawatu/Wanganui (2.7%).
At 14.4%, Auckland affordability declined the most over the last year, but not that much more than other areas. Canterbury / Westland 11.7%, Southland 9.4%, Otago 9.2%, Waikato/Bay of Plenty 7.8% and Wellington 7.7%.
Despite media headlines of a home affordability crisis in New Zealand, according to Massey University, affordability levels are still a long way from their highs of the last two property cycles.
The following graph shows how the index peaked at 27 for September 1997 and 34 for September 2007. This compares to 22.6 for September this year.
This result was also pointed out in the MBIE briefing paper to the Minister of Housing.
More information on this study here