House affordability falls, build consents up

Photo / APN

Wages have only gone up $34.53 annually against house prices, which are up by $38,000.

These are the findings of the Home Affordability Report quarterly survey released by Massey University this morning.

"The all districts national affordability index deteriorated by 7.6 per cent during the 12 months ending May 2014. There was no real surprise in this result because the average annual wage increase of $34.53 was not enough to offset a $38,000 increase in the national median house price and an increase in the average mortgage interest rate from 5.57 per cent to 5.64 per cent," the report said.

"This deterioration in affordability is likely to continue as recent interest rate increases are incorporated into the debt servicing costs for home mortgages.

Affordability improved in five regions: Southland [14.4 per cent], Taranaki [8.4 per cent], Manawatu/Wanganui [6.2 per cent], Nelson [2.2 per cent] and Otago [0.8 per cent].

But it deteriorated in seven regions: Central Otago/Lakes [12.2 per cent], Canterbury [10.6 per cent], Auckland [9.1 per cent], Waikato [4.8 per cent], Northland [3.5 per cent], Wellington [3.4 per cent] and Hawkes Bay [0.7 per cent]. On a quarterly basis the all districts national affordability index deteriorated by 4.5 per cent compared with 2.8 per cent improvement in the previous quarter," the report said.

Building consents hit 7-year high

Last month's new house-building consent levels were at their highest in seven years.

Statistics NZ has just released building consent data showing the number of new dwellings consented are now back to levels of September, 2007.

But they are still below the series peak in 2004, according to business indicators manager Neil Kelly.

Nationally, 2125 new dwellings were consented in May, including 195 apartments (down from 432 apartments in April). Apartment numbers vary a lot from month to month.

The regions consenting the most new dwellings were Auckland with 611 (including 109 apartments), Canterbury 605 (including 46 apartments) and the Waikato 192.

"A total of $1.2 billion of building work was consented in May, with $842 million of residential work and $370 million of non-residential work. Data for building consents is obtained from all territorial authorities," Statistics NZ said.

There have been 22,849 consents for new residential dwellings were issued in the 12 months to May.

"The strengthening is becoming increasingly broad-based throughout the regions, with 10 of the 16 regions reporting a climb in issuance compared to a year ago," said an ANZ report following the release of the building consents figures.

"The onus is on supply-side capacity to keep pace, with increasing productivity in the construction sector needed to contain pricing pressure and prolong the expansion."

Read the full housing affordability report here: