Warning comes with improvement in New Zealand home affordability

New Zealand's housing crisis could worsen despite recent improvements in home affordability, according to a report out Tuesday.

Housing in Auckland -- home to a quarter of the population and the focus of the country's housing problems -- was a record 59-percent less affordable than the rest of the country, said the Massey University Home Affordability Report.

The report showed an overall improvement in national affordability of 5.7 percent in the last quarter of 2015.

Housing in Auckland improved in affordability by 1.4 percent, despite continuing high values and "severe unaffordability."

Report author Dr Susan Flint-Hartle said there was a real possibility of deteriorating affordability in the coming months.

"Recent reductions in borrowing costs and positive sentiment about a two-year hiatus in interest rises hold the potential to keep pushing house prices higher," Flint-Hartle said in a statement.

Interest rates continued to fall and there was some speculation that the Reserve Bank of New Zealand's (RBNZ) historically low official cash rate of 2.5 percent might fall even further.

"This may encourage more people, both homeowners and investors, into the market increasing demand and putting upward pressure on prices," she said.

There had been a minor drop in the national median house value to 459,500 NZ dollars (301,012 U.S. dollars), but house prices had still risen in almost all regions.

On Monday, the government welcomed figures showing consents for new homes hitting a 10-year high in November last year, after rising 17 percent year on year.

Consents in Auckland numbered a record 966, but it was still below the 1,000 per month that the government estimates is needed to match demand.

The RBNZ has repeatedly warned that soaring house prices in Auckland pose a risk to the country's financial stability. Endit