Auckland has lost its title as the least affordable place in New Zealand to buy a house.
Massey University has released its latest home affordability report, for the first quarter of 2017. It compares the cost of borrowing, house prices and wage levels in centres around New Zealand. It does not consider the deposit required to purchase, which is a hurdle for many first-home buyers.
It shows Auckland's median house price dropped $51,944, or 6.1 per cent, over the three months. That pushed its affordability up 7.5 per cent.
Central Otago Lakes' prices continued and affordability was down 11.2 per cent compared to the year before.
READ MORE: Regional house prices soar as Auckland levels off
"Central Otago also has the largest decline in affordability over the 12-month period, which is a reflection of tourism industry demand in Queenstown, a shortage of housing supply, speculative investment demand, a focus on high-end lifestyle living in the area, and largely stagnant wage increases," report author Associate Professor Graham Squires said.
Seven regions reported an increase in affordability over the quarter and the year.
But Squires said Auckland and Central Otago Lakes were still stretched on a ratio of median house price to median wage.
He said the improvements in affordability might not last because interest rates look set to rise.
"A steady OCR unchanged at 1.75 per cent has helped to keep borrowing costs low more broadly. However, it is important to note that the quarterly interest rate statistic used here at 4.85 per cent is a weighted average of all loans for January. New customer rates for January had moved up, and were much higher, between 5 per cent to 6 per cent depending on the type and term of the loan."
Nationwide, home affordability improved 7 per cent over the quarter.
Over the year, a 0.5 basis point drop in interest rates meant a 10 per cent reduction in mortgage interest costs, the report said. Combined with wage growth of 1.6 per cent, it pushed nationwide affordability up 2.2 per cent for the 12 months.
The regions which have seen affordability improve were: Auckland, up 7.5 per cent in the quarter, Waikato/Bay of Plenty, up 5.6 per cent, Taranaki, up 11.3 per cent, Manawatu/Wanganui, up 6.3 per cent, Nelson/Marlborough, up 6.4 per cent, Canterbury/Westland, up 5.3 per cent and Southland, up 10.7 per cent.
Other regions reported steep declines in affordability - Northland's was down 9.2 per cent on an annual basis.