National home affordability improved 8.7 percent in the three months to June. Photo: 123RF
- Home affordability and rent levels improve - Massey Uni reports
- Falling interest rates, higher wages, and weaker housing market drive
- Rent affordability improves through higher wages and lower rents
- Growing affordability gap between regions.
Houses and rents are more affordable as costs fall and consumers benefit from lower interest rates and higher wages, according to new reports from Massey University.
National home affordability improved 8.7 percent in the three months to June, on top of a 9.3 percent improvement in the first quarter of the year.
Report author, Massey Business School senior lecturer Arshad Javed said a combination of lower borrowing costs and wage growth has helped offset affordability pressures in many regions, even where house prices stayed high.
"It's the continuation of a national trend we've been observing over the past year. While there is still regional volatility, the underlying indicators are showing more consistency."
For the quarter, the national median house price was down 1.2 percent to $763,000, while an average two-year fixed mortgage rate was 37 basis points lower to 5.66 percent, and weekly earnings were 1.65 percent higher.
On an annual basis affordability improved by nearly 27 percent, with the two year fixed mortgage down by 1.72 percentage points, wages up close to 4 percent and a slight fall in the national house price.
Regions more affordable than cities
All 16 regions recorded an improvement in affordability over the year, with of more than 30 percent in Northland, Manawatū-Whanganui, and Marlborough.
"In most of these regions, a combination of price stability or decline, falling mortgage costs and steady income growth contributed to the improvement."
For the June quarter, prices rose in half the regions and were unchanged or weaker in the other eight.
Javed said property markets through the country were localised, but the overall picture was one of improving access to home ownership.
Rents more affordable - in some places
It was a similar story with rents, with higher wages and a fall in rents improving affordability.
For the quarter ended March rental affordability improved by 3.5 percent, split nearly evenly between a drop in rents and an increase in average weekly incomes.
Compared to a year ago national rentals affordability was slightly improved .
But the report noted a widening rent gap between regions, with nine of 16 showing improved affordability during the quarter-- the highest in Canterbury, Manawatū-Whanganui, and Wellington.
The most significant decline was in Gisborne, where rents surged by 41.2 percent during the quarter, with smaller increases also for Northland, Bay of Plenty, Taranaki and Southland.
"It's a timely reminder that affordability is highly localised and needs region-specific responses," Javed said.
On an annual basis Gisborne had the biggest decline in rental affordability, but Javed noted nine of the 16 regions were still below the annual average.
