While home affordability in New Zealand improved in the March quarter for the second successive quarter, buying a home remains distinctly less affordable than it was in the March quarter last year.
That's according to AMP Banking's home affordability survey conducted by Massey University.
Home affordability in New Zealand improved 2.3% on average in the March quarter and is expected to improve further this quarter as interest rates continue to decline. But it's still 10.1% worse than in the March quarter last year.
The survey found declining mortgage rates, a 0.3% decline in the median house price and a 1.4% rise in average weekly wages all contributed to the improvement in the latest quarter.
However, the median house price appeared to be the major determinant. While the national median house price fell from $174,000 to $173,500 over the quarter, house prices fell in five regions and rose in 12.
Affordability increased in the regions where house prices fell and decreased in the regions where house prices rose.
On an annual basis, all regions experienced a decline in home affordability and in nine of the 11 regions the median house rose over the year. The two regions in which house prices didn't rise, Taranaki and Southland, experienced the smallest declines in home affordability.
Perhaps that explains why housing sales activity remains subdued. Massey quotes Real Estate Institute figures showing housing sales were down 18.5% at 64,779 year on year.
The regions which experienced a quarterly improvement in affordability were Taranaki, up 7%, Wellington, up 5.4%, Hawkes Bay, up 3.8%, Northland, up 2.7% and Nelson, up 0.6%. Affordability fell 4.8% in Southland in the quarter and 3.6% in Otago and the declines in the rest of the country were all less than 1%.
In the year, affordability fell most in Northland, down 32.9%, and Otago, down 16.5%, and fell least in Taranaki, down 0.5%.
