The least affordable city in New Zealand

PHOTO: Tauranga. FILE

Tauranga remains the least affordable place to live in New Zealand, according to the latest data from CoreLogic.

The lack of affordability in the region reflects a national trend, with property values across New Zealand growing 15 times faster than incomes.

In Tauranga, 49 per cent of the average gross household income is required to service an average mortgage with an 80 per cent loan to value ratio.

CoreLogic NZ’s Housing Affordability Report, published every six months, shows as of Q2 2021, the average property value across New Zealand is 7.9 times the average annual household income, a record high in the series’ 18-year history.

The figure is up sharply from the 7.4 times recorded just three months ago and 6.6 times of 12 months ago.

The long-term average is for property values to be 5.8 times the average annual household income.

Property values in New Zealand rose 15 per cent during the first six months of 2021, well ahead of the increase in gross average household income which rose just 1.0 per cent.

“Since our last Housing Affordability Report in late February, the New Zealand economy and property market have generally remained very buoyant,” says CoreLogic NZ chief property economist Kelvin Davidson.

“Even though mortgage rates have remained very low, albeit they’re now starting to rise, housing affordability has simply become worse, and that’s from an already stretched position. Those higher mortgage rates themselves will exacerbate the situation in the coming months, albeit they should eventually aid affordability by dampening house prices.”