Lower quartile house prices dropped in most regions in May, but increased in Northland, Auckland, Waikato and Taranaki

By Greg Ninness

Housing became more affordable for first home buyers in nine regions and worsened in three last month, according to the latest interest.co.nz Home Loan Affordability Reports.

The movements in affordability were mainly driven by changes in the Real Estate Institute of New Zealand's lower quartile selling price, which dropped slightly in May compared to April in eight regions, improving affordability in those regions.

Conversely the lower quartile price rose in four regions compared to April, worsening affordability in three of them.

The improvement in home loan affordability was also helped by a very slight drop in mortgage interest rates, with the average of the two year fixed rates offered by the major banks dropping to 4.66% in May from 4.69% in April.

Separate Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke's Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand

Regions that recorded a fall in their lower quartile selling prices in May compared to April were Bay of Plenty, Hawke's Bay, Manawatu/Whanganui, Wellington, Nelson/Marlborough, Canterbury, Otago and Southland.

In most cases the drop in prices was small, -$5000 or less, however there were more substantial falls in Nelson/Marlborough -$36,000, Otago -$17,000 and Southland -$10,000.

Those price falls, combined with the modest fall in average mortgage rates, saw affordability improve in all eight regions.

Affordability also improved in the Waikato even though the lower quartile price increased in the region, because the size of the price was so small (+$1000) it was cancelled out by the fall in interest rates and a marginal improvement in household incomes.

The other regions to record increases in the lower quartile selling price in May compared to April were Northland +$4000, Auckland, +$5000 and Taranaki +$17,000.

In all three cases the price rises more than offset the effect of the fall in average mortgage rates, leading to a worsening of affordability in those regions.

Auckland & Queenstown still unaffordable

However Auckland and Queenstown remain the only regions in the country where housing is considered unaffordable for typical first home buyers on median incomes, because the mortgage payments on a lower quartile-priced home would eat up more than 40% of their take home pay.

In Auckland, the lower quartile selling price increased from $660,000 in March and April to $665,000 in May, which pushed up mortgage payments from 42.99% of median take home pay for typical first home buyers to 43.14%

Around the rest of the country, the mortgage payments on a lower quartile-priced home ranged from 10.36% of take home pay in Southland to 28.62% in the Bay of Plenty, all well within affordable limits.

And although overall affordability worsened for first home buyers in Auckland in May, that was not a uniform trend throughout the region.

Lower quartile prices declined in May compared to April in Rodney, South Auckland and Franklin which saw affordability improve in those districts, while a modest increase of $1000 in Waitakere's lower quartile price saw affordability improve there once the decline in interest rates was taken into account.

However more substantial rises in lower quartile prices in central Auckland, North Shore and Papakura saw affordability worsen in those districts.

One area where there was a particularly large fall in the lower quartile price was Queenstown, where it dropped from $727,000 in April to $600,000 in May, the lowest it has been since August 2016.

Queenstown remains the only district outside of Auckland where housing is unaffordable for typical first home buyers on median incomes.

Individual affordability reports for districts and regions throughout the country can be accessed by clicking on the links in the box on the left.

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70 Comments

Hopefully the trend of more terraced houses and apartments will improve lower quarterly affordability as more come to market.

I lived in London for a while. When people spoke about an "average" house, they were referring to a two or three bedroom terraced unit. You are the landed gentry if you own a stand alone house with a yard over there. I think this is the way that Auckland is headed in the long term.

You are the landed gentry if you own a stand alone house with a yard over there. I think this is the way that Auckland is headed in the long term.

I do get the impression that is the hope and dream of a number of folk on here. They're hoping that having gotten in at the right time they can be the new landed gentry. Heck, some of them even painfully awkwardly speak of their personal brand, their old money neighbours etc. ...a bit of status anxiety, from the looks of it.

This certainly isn't something that I hope for. I just think that it is an inevitability. With population increase, the only realistic way to keep a lid on lower quartile prices it to build more units on the same amount of land.

What I do hope is that the higher density development is well designed and strategically located along transport corridors (quality compact like they have done well in Australia and Canada).

Wasn't meaning to imply you, sorry.

Palmerston North:

"The lower-quartile house price was $322,000 in April, up from
$305,000 last month. Annual growth was 19.2%, from the $270,100
lower-quartile house price in April."

$322,000 to buy a house where your kids will probably develop asthma to be stuck in Palmerston North for the rest of your life. Jesus.

Still a bargain.

Palmerston North has 90k population - about 10-20X the size of most of the places people call "the regions" eg. Gore, Wairoa.

Also twice the size of Nelson, yet 500k seems starter price for that region, similar story Napier - Palmy population much larger and growing faster then these regions

The fact that Napier and Nelson are much nicer places than Palmy has quite a lot to do with it. Mumbai has squillions of people, doesn't mean I'd want to live there!

I’m a big fan of Professor Paul Spoonley on this topic. I believe him when he says that two-thirds of the regions will experience population stagnation or decline going forward. Avoid these regions like the plague, but invest in the rest.

I like Dunedin, Tauranga, Palmy, Wellington. Hamilton is good on paper, but it’s such a god-awful place that it’s not going on my list.

You are wrong about Hamilton, the people are good, the properties and property prices are good. The weather in Auckland yesterday and today was rubbish I believe but Hamilton was warm calm and dry. We have to go to auks for properties we own and there are a still a lot of w...rs there who should move to Aussie, they would fit in well

I take your point. However, it would be better if it had a beach or at least a consistently swimmable river. I feel like it’s close to nice places, but not a nice place itself.

I’m guilty of generalising, but I don’t agree about the people. Strikes me as the type of place where people shake babies and indulge in the meth. Or eat MacDonalds in their car and then leave the rubbish in the carpark. In my experience the people there are not happy, perhaps because they were forced to move there for affordability or employment reasons.

“I’m so looking forward to moving to Hamilton for the awesome lifestyle, urban form, culture and liveability”. Be honest now, this doesn’t sound right.

Speak for yourself since you know so much about that meth shit, shaking babies and throwing out your rubbish, probably indulged in that kind of behaviour. Stay where you are BLSH (bullshit abbreviated) you would only dampen the spirits of more people should you move.

Tip of the day bud, it defeats the purpose to use an abbreviation and then write out the entire word in brackets immediately thereafter.

Enjoy Shmamilton, and remember - never shake a baby.

“I know you are but what am I?” That’s primary school stuff right there.

Hopefully as higher density will make the city more livable by decreasing commute times, social isolation, and lead to healthier pedestrian friendly city infrastructure.

These small price changes are totally inconsequencial.
Do anyone really believe that there will be a stampede of buyers into this or that market because of a small blip in affordabilty?
It's time for banks to extend 100% finance to approved FHB's. That will do more to solve the so called housing crisis, than anythig else.
It's crazy that anyone can buy hundreds of thousands of dollars worth of furniture, cars or appliances with no
money down, no interest, 12 months no payments, all of which depreciate to near zero before they are paid off, but cannot buy a house which at worst remains more or less static in value.
The system is nuts.

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21

100% finance to blow up the housing debt bubble even further? No thanks. Not unless you are adding on a 5 x DTI limit to stop the bubble going through the roof. Or make Mortagages non-recourse so the bank knows they will be the ones carrying the risk if the bubble pops.

Accurate username, I must say.

100% finance in an over heated housing market with a supply problem. Pure carnage would be the result.

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A debt problem is not solved with more debt

If i was a fhb with deposit and cash approved id be sitting on the fence for a bit more vs jumping in now. Also surely the rate for secured house lending is way less than furniture and cars? Agree a dti limit is going to be required to flush out the domestic debt stackers.

Its either the great asset reset (impacting the few) or massive wage and price inflation (impacting everyone and bailing out the few).

Honda is advertising no deposit and 3.9% interest on new cars at the moment. No doubt Harvey Norman or someone has some furniture deals where they jack the price up and sell it with "60 month no interest" finance.

Cars and other such goods (tractors, heavy machinery) are often financed by banks or entities associated with the industry itself overseas. I've seen HP contracts for agricultural gear, financed out of the US for 0.99%.

The example simply does not translate into anything meaningful for Housing.....

Actually the "price" advertised assumes you dont ask and pay in cash but indeed get Credit. So yes it isnt really "interest free" as you can get 100s off if you say cash buyer. You also pay a $50 "maintainance fee PER year so that adds on $250. The real scams are the "18months: interest free as you pay 2 year fees but are cut off from 6months paying time.

Too little, too late. This could go on for 5 years and it would still be a poor economic decision to buy a first home in NZ.

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Agreed. We have just lost several highly skilled people at work due to stupid house prices in NZ. Both went to Aussie as has been happening for some time.

Just out of curiosity, what industry are you in Averageman?

In my case IT. We have lost really good PMs to OZ, more opportunities, more money, better managers, a pension so net better off on so many levels it isnt funny.

If only Australia wasn't full of toxic creatures.. snakes, crocs, spiders, Australians..

Barnaby Joyce...maybe he fits in all those categories

and CC impacts like water shortages, bush fires and and the most toxic of all, yes, Austrailians.

Less flooding, earthquakes and risks due to water rising in many cities, so there are some trades that are worth it. Besides a large chunk of many Australian cities are populated by NZders & other nationalities so easy to fit in.

I work in IT as well. As soon as I have my aussie house deposit saved up I'm joining them.

Enjoy paying that non refundable stamp duty.

That almost sounds bitter....

I looked at working in Sydney a number of times over the years. Most recently I looked at it when my role was looking shaky. A friend recounting the settlement of his $1,600,000 home in Balmain put me off. IIRC he paid somewhere around $100k in stamp duty. There is no land of milk and honey anymore. If you can compete in Sydney, go for it. All I saw was money going out and moving further from the CBD. I don't have the years left to benefit from it.

"I don't have the years left to benefit from it." Translation, the Sydney property market is Dingo tucker for at least the next 25 years.

There's no stamp duty for a FHB purchasing a place of residence in the states I've looked at.

.... I think there is

Foreign Citizen Stamp Duty | Does It Apply To Me?
https://www.homeloanexperts.com.au/non-resident-mortgages/foreign-citize...

Read that page. It doesn't apply to 444 SCV holders who are in the country during the time of purchase.

(444 being the visa almost every new zealand citizen is given on arrival)

and the nice big pension.....

And no tax on the first $20,000 you earn ...

I agree Terraces are the way. We own one in SYD they are fantastic. Beautiful looking, low maintenance, never notice the neighbours, they are part of Sydney's fabric. AKL did a few of these but did them very badly. Hopefully the next ones are of better quality.

Wish people would stop posting this rubbish about housing being unnaffkrdable in NZ.

Greg has clearly pointed out that there are only two places in NZ that are considered unaffordable for first home buyers and that is Auckland and Queenstown.

Reality is that NZ is just not these two places and with the problems that Auckland currently have and will get worse, why not damn well move elsewhere for a far better lifestyle???

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Why not work to fix the problems rather than ignoring them or pretending they don't exist?

Isn't your solution simply telling young Kiwis that they should have no expectation of being able to live feasibly in their place of birth because - for the benefit of those born before them - they'll simply have to make way for wealthier people coming from outside NZ? (E.g. as per the recent stats that one poster noted shows almost half of the purchases in Upper Harbour in the measured period had no NZ citizen involved in the buying side.)

Rick, by building 10,s of thousands of shoe boxes that are stated by Twyford as being affordable, is not going to fix any problem.
If you want to live like they do in Hong Kong then I say good luck to you!
There is a greater life outside of over congested Auckland, but many have their heads in the sand and aren’t prepared to alter things to improve their lot!

They need to build, definitely. I'm not arguing they're doing everything right just that increasing supply is important and NZ has a successful history of government involvement in it and people should stop pretending the country does not.

All that aside, I would actually prefer an apartment of a decent size to a standalone house on land I have to look after. I've lived in apartments a few years in multiple different locations, and in suburban houses in Auckland.

Good lifestyle, incredibly low outgoings, convenient walk to work, close to parks where someone else mows the lawn, weeds the gardens etc. And the views.

Not to mention an extra 1.5-3 hours of life every day that friends living further out in Auckland give up in traffic.

We may at some point move to the burbs again but I'm not really looking forward to that, in Auckland. May head off overseas instead, never know. San Fran, Seattle, Denmark or whatnot.

I would take interest's affordability with a pinch of salt. International affordability benchmarks are 28% for mortgage cost or 36% for total housing costs (mortgage, rates, insurance, maintenance). Note that international benchmarks are also based on 25 year mortgages.

Are those percentages of Gross or Net income? But i agree they should have stuck to 25year mortgages.

Calculated on gross income.

Note: my %s above were slightly off from memory - have updated them to the right values 28%/36% above.

"Greg has clearly pointed out that there are only two places in NZ that are considered unaffordable for first home buyers and that is Auckland and Queenstown."

if you're good at maths, can you tell me what the percentage of nz'ers live in those two cities?

Not many, http://shorturl.at/bnprB

But more seriously.. Auckland is ~35% of population, Queenstown is lost in the rounding error with its 25,000ish population.

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Wish people would stop posting this rubbish about housing being unnaffkrdable in NZ.

Uninsulated mouldy timber shitboxes in small towns with no jobs are affordable, sure. First world housing in a place with jobs? Prepare to pay top $

Where ever the jobs and opportunities are, housing is un-affordable for too many ppl.

and its gets worse when the leader of the Nation claims that there is not an issue, rather than taking action on it..

A lot of skills like tech, medical and construction are very easily relocated.Unfortunately most skilled worker in Akl consider only has two paths for better opportunities, being Aussie and or London. Everyone I know that has moved to Aussie sighted stupid house prices as the number one factor, and that includes people escaping the earthquake choosing to bypassing Awkland.

The options of relocating to CHCH and renting on potentially damaged/perhaps repaired box of TM2 is not even a blip on their radar. With trades downsizing as the rebuild winds down it will be interesting to see whats activity is actually left left there to support the housing market in CHCH. I suspect the local Maserati dealer will be selling less cars as a matter of course.

Averageman, moving to Chch may not be a blip on your radar!
Plenty of opportunities in Chch.
If people want to remain in Auckland then they should stop whining on about house prices up there!
If you don’t like something do something about it.
House prices in Auckland are not going to miraculously drop just so that everyone can afford them.
If you want to mortgage yourself to,the hilt for your own home then That is your perogative.
Personally would rather invest in property that gives us lifestyle without having to have a day job.
There is a difference in people’s views and that is what makes people more successfully financially than others with their head in the sand mentality!
That is why you are Average, and I am “The Man”.

"Plenty of opportunities in Chch" like the opportunity to deal with EQC, and a City Council that cannot even manage water treatment.

100% finance would not increase house prices so long as proper controls are in place e.g. independent valuations, proof of servicability etc. A banks mortgage is secured from the first dollar up. It's only the last 10% that may be at risk and that can be covered by insurance.

More debt is not the answer. 100% deposit would be the only sane approach to this debt bubble.

Huh, And how many first home buyers out there can afford to pay 100% deposit?

"A banks mortgage is secured from the first dollar up"

Can you please explain that??

Bank mortgages are secured against the House (the Security) so if the house price goes down there is not on longer anything of value securing the loan.

How are we going to generate a subprime crisis unless home owners have no skin in the game and walk away from the property?

Hahahaha! Maybe that is what Biggdaddy is going for here in NZ, get to reset faster =) everyone starts with zero.

Big Daddy = Ollie Newland btw

Have a good read of this people https://www.9news.com.au/national/2018/06/19/16/07/sydney-property-price... if you think AKL is immune good luck to you

Yayyyy!! Great news! Buy an overpriced dog kennel with an income similar to the 90s... saw an old friend before I moved to Perth... said the house that he brought and did up in late 90s for $65k in New Plymouth (that he also subdivided and built on the back to sell) was recently valued at 650k... wages are pretty much the same as in the 90s... in fact I was getting more in my professional role in 2000 than I was only 3 months ago...!!! Shhesh... so glad Im back in Perth!!

Yayyyy!! Great news! Buy an overpriced dog kennel with an income similar to the 90s... saw an old friend before I moved to Perth... said the house that he brought and did up in late 90s for $65k in New Plymouth (that he also subdivided and built on the back to sell) was recently valued at 650k... wages are pretty much the same as in the 90s... in fact I was getting more in my professional role in 2000 than I was only 3 months ago...!!! Shhesh... so glad Im back in Perth!!