A long way to fall in order to afford a home: interest rate rise and house prices surge in 2021
The latest Massey University Home Affordability Report shows an overall decline in national affordability over the most recent quarter, largely driven by soaring house prices in most regions and an increasing interest rate.
The report, which covers the quarter from August 2021 to November 2021, shows median house prices across the country increased by 8.8 per cent in aggregate. This, combined with an increase in interest rate, has seen national home affordability decline by 24 per cent.
National house price-to-income ratios have declined this quarter, with house prices moving from 12.8 to 13.8 times the average annual wage.
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 decline.
“In this quarter we have seen a decline in affordability. If we take an annual view, there’s a solid decline in affordability at a national level of 38.2 per cent, reflected in all 16 regions,” Professor Squires says.
“Within this aggregate result, there are some large regional changes, including 93.4 and 88.1 per cent decline in affordability for the Taranaki and Gisborne regions respectively over the past year, and more than 35 per cent decline in affordability for the remaining twelve regions,” he adds.
The greatest increase in median house prices, in percentage terms, has for the last quarter occurred in Gisborne (37 per cent or $185,000), Hawke’s Bay (18.6 per cent or $130,000), West Coast (16.7 per cent or $50,000) and Northland (14.6 per cent or $95,000). All sixteen regions showed an increase in house prices in this quarter, with the exception of Marlborough (-19.4 per cent or -$170,000).
Read the full December 2021 Home Affordability Report here.
National deterioration in rental affordability both quarterly and annually
Rising house prices and increase in interest rate lead to decline in home affordability
Rising house prices and decreasing income lead to decline in home affordability
Created: 07/03/2022 | Last updated: 07/03/2022
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