Hawke's Bay homes have become increasingly unaffordable as people living in the region earn less and house prices rise, according to a newly released report.

The 10th annual Demographia International Housing Affordability released on Monday showed median house prices in Napier-Hastings had risen $35,800 annually, while median household incomes had fallen $2900.

The survey which categorises all housing markets globally by geography, found Napier-Hastings was the world's 297th most unaffordable urban centre out of 360 cities in 2013.

This showed a fall from 2012 when the twin cities were the 233rd most unaffordable urban area out of 337 cities.


The survey found Napier-Hastings as having a median household income of $54,200 and a median house price of $290,500, giving the city a total median multiple of 5.4 (house prices divided by incomes). Anything more than 3 is regarded as "unaffordable".

In 2012, the median house price in Napier-Hastings was found to be 4.5 times the area's median household income, with the median household income at $57,100 and a median house price of $254,700.

Hawke's Bay Chamber of Commerce chief executive Wayne Walford said house prices would always remain market driven, while stagnant or failing wages were the result of businesses cutting costs because of the recession.

"Reducing salaries has been an option to try and minimise the wages component of cost as people try to get through the end of the recession."

He said that despite Napier-Hastings becoming increasingly unaffordable there was a marketing opportunity for the region because it was still cheaper than a number of other New Zealand cities.

The report's co-author Hugh Pavletich said the figures were a "worrying trend" and suggest Napier-Hastings, like most of New Zealand, was growing out of reach for ordinary Kiwi home buyers.

He said no urban area of the country surveyed in the report showed a trend towards affordability. Unsurprisingly, Auckland was the most unaffordable New Zealand city and the world's 347th most unaffordable out of 360 cities, with Hong Kong at the top.

The best or perhaps easiest place to buy a house in New Zealand remains Palmerston North/Manawatu, however incomes have slipped there, too, from $55,100 last year to $50,900 this year, although house prices have dropped from $240,700 to $231,100.