House prices are ballooning out of kilter with low wage increases as home affordability continues to dive.
The Home Affordability Report, by Massey University’s real estate analysis unit, shows that, during the 12 months to May, houses were 7.6 per cent less affordable.
Wellington and Hawke’s Bay showed 3.4 per cent and 0.7 per cent dips in affordability, but were nothing compared with Central Otago/Lakes District at 12.2 per cent, Canterbury at 10.6 per cent, and Auckland at 9.1 per cent.
Report author Bob Hargreaves said an average annual wage increase of $34.53 was not enough to neutralise a $38,000 jump in the median house price.
The Wellington region’s median house prices grew about $22,000 to $418,500 during the year to May, while Hawke’s Bay’s stayed static, not shifting significantly from a median of $285,000.
Hargreaves said that, by standard economic measures, the national housing market was overvalued. “You’d have to say we’re due for a decline, or at least a return to static.”
Real estate agent Jamie Gillies said Upper Hutt was the most affordable area in the region, with a tidy three-bedroom home fetching about $300,000. Plimmerton was another good area in which to buy.
Quotable Value’s Pieter Geill said there was “not a lot to read into” the Massey figures for the Wellington region.
“The pattern for the past 12 months is that we’ve been going nowhere fast,” Geill said.
The onset of winter had slowed sales and mortgage applications, while mortgagee sales and doer-uppers were still attracting interest, especially in Petone, which was thriving on its character, cafe culture and close proximity to Wellington city. The most affordable houses in Lower Hutt, ranging between averages of $230,000 and $260,000, were in Stokes Valley, Wainuiomata, Naenae and Taita, with “reasonable activity” in the newer Kelson subdivision, he said.
Porirua’s best value was in Cannons Creek, about $200,000, then Ranui, Ascot Park and Titahi Bay in the $300,000 zone.
Wellington’s most expensive suburbs were Seatoun, Kelburn, Wadestown and Khandallah, with averages ranging from $900,000 in Seatoun to about $700,000 in Khandallah.
Geill said he was surprised at how affordable central Wellington had become, with average apartment units selling for about $300,000, and the average house price in Te Aro about $400,000.
For entry-level buyers, the pick of the suburbs was Newlands, where houses went for an average of $375,000. Tawa, Paparangi and Johnsonville rounded out the capital’s cheapest suburbs, at an average of just over $400,000.
– The Dominion Post
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