The gap between the price of houses in urban and provincial areas is closing fast, partly because jaded city dwellers are trying to escape to the country.
Their dream of a rural lifestyle is pushing up prices in less populated areas, says the latest AMP quarterly home affordability index.
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a result housing has become less affordable in almost every region throughout the country.
The index for January to March, compiled by Massey University, shows the steepest annual decline in nine years.
Only Auckland, Wellington, Nelson/Marlborough and Southland had become slightly more affordable in the latest quarter compared with the previous three months, the study found.
Graham Crews, senior lecturer in real estate at Massey University, said the shrinking gap between rural and urban house prices could be attributed to population shift.
"There is some anecdotal evidence that jaded city dwellers are migrating to the provinces for cheaper housing and a lifestyle change," he said.
But he had other reasons for prices rising fast outside the city limits.
City and foreign buyers scouting for cheap rental housing stock could be pushing up prices, he said.
"In terms of investor activity, the shrinking gap could also be due to city-based and offshore investors seeking improved returns by purchasing rental housing in New Zealand's regional towns as well as the cities."
Affordability in the last quarter picked up 0.3 per cent in Auckland, 1.5 per cent in Wellington, 3.8 per cent in Nelson/Marlborough and 2.5 per cent in Southland.
But it fell 3.9 per cent in Northland, 5.9 per cent in Waikato/Bay of Plenty/Gisborne, 3.3 per cent in Hawkes Bay, 16.3 per cent in Taranaki, 4.5 per cent in Manawatu/Wanganui, 3.8 per cent in Canterbury/Westland and 5.5 per cent in Otago.
When the figures are analysed annually, affordability declined in every region because house prices are surging ahead so fast in spite of a steady round of interest rate rises.
Real Estate Institute figures out last month showed a new national house price median of $280,000, which took some banking economists by surprise.
