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Housing Affordability Drops

Homes are costing 10.3 times wages thanks to higher interest rates and a bump in prices.

By: Sally Lindsay

1 March 2024

Housing affordability has dropped because of high interest rates and a rise in median house prices.

Houses are costing 10.3 times wages. At the national level, overall median house prices slightly increased by 3 per cent, or $23,000, in the final quarter of last year.

Massey University’s latest Home Affordability Report shows median house prices have increased in 11 regions with a 3 per cent increase nationally.

Coupled with the rise in interest rates, national housing affordability has declined by 4 per cent.

Four regions experienced a drop in median house prices, with the Gisborne region having a 13.8 per cent drop, equivalent to $90,000.

The West Coast recorded the highest increase in median house prices for the quarter at 20.2 per cent, reflecting a rise of $67,111.

Rates Hike

Report author Dr Arshad Javed, of the university’s Real Estate Analysis Unit (REAU), says the overall decline in affordability is in part due to the increase in interest rates.

“Looking from an annual perspective, the decline in affordability sits at 8.7 per cent nationally. This drop has been driven by the uptick in residential mortgage interest rates, which stand at 7.60 per cent, compared to 6.47 per cent a year ago.

“The decline in affordability is evident in most regions of New Zealand, with the exception of Gisborne and Taranaki.

“Canterbury has experienced the most significant decline, with a 16.4 per cent drop over the year. Canterbury also saw the highest increase in median house prices, rising by 4.8 per cent, which is equivalent to a $32,000 increase,” Javed says.

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