Demand for big-budget property hikes prices

By Patrick O'Sullivan, Victoria White

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Housing became less affordable in the latest quarter.
Housing became less affordable in the latest quarter.

Rising house prices have made Hawke's Bay homes less affordable, according to the latest Massey University Home Affordability Report.

The report, covering the period from December 2015 to February 2016, shows the region fluctuated in affordability from quarter to quarter.

"Improvements over the last three quarters in Hawke's Bay have been reversed by a 6.7 per cent deterioration in the most recent quarter," report author Dr Susan Flint-Hartle said.

The fluctuation matches the observation of market commentators that lower-priced houses were in greater demand in the previous quarters, lowering the median price.

Demand has now moved to higher-priced homes, lowering affordability.

Auckland's burgeoning house market, which has steadily dragged up the national house price average, improved its affordability.

Dr Flint-Hartle said the "modest" annual improvement in affordability of 3.1 per cent in Auckland was due to lower interest rates and the Reserve Bank's loan-to-value ratio restrictions.

"Despite the small improvements we've seen over the past few quarters, Auckland remains 59 per cent less affordable than the rest of New Zealand and that is a record high. The only other region that is more unaffordable than the national average is Central Otago Lakes, at 48 per cent."

She said regional house prices appeared to be demand-driven helped by "a ripple effect as some Aucklanders vacate the city for a more relaxed lifestyle or to seek better investment returns".

Dr Flint-Hartle said it remains to be seen whether lower mortgage rates would also push up house prices in the longer term.

Property Brokers regional manager for Hawke's Bay Paul Whitaker said he thought the rising house prices was just a natural occurrence of the spillover from the rest of the country.

"There's demand across the board but the demand for higher-priced houses is the highest it's ever been.

"Most places have already gone in Auckland, Tauranga, but there's still some room in the Hawke's Bay market."

Tremains Real Estate director Simon Tremain said there was a significant difference between the homes people could afford six months ago and what they could now.

"The median house price has moved up 20 per cent ... The affordability of homes all comes back to people's incomes and the interest rates coming down."

Mr Tremain said he could see the median house price increasing to $400,000 in the next year or two.

February figures from QV show the median house price in Hastings District was $326,092 and $352,995 in Napier City.

- Hawkes Bay Today

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