Rising house prices tighten squeeze on New Zealanders

The housing crisis in New Zealand's biggest city is spilling into the rest of the country and making homes increasingly unaffordable for ordinary people, according to a study out Friday.

A quarterly study from Massey University showed continued declines in home affordability across the country in the last quarter of 2016 as prices rose in Auckland, home to a third of the population.

The report showed affordability declined by 2.8 percent nationally, with some big declines in the North Island regions of Taranaki, Northland and Manawatu-Wanganui, and in the South Island regions of Southland and Nelson-Marlborough.

"This has largely been driven by rising house prices across many parts of New Zealand. While it's impossible to quantify the extent, the continued spillover of Auckland house price levels into other regions may be a factor," author Associate Professor Graham Squires said in a statement.

Auckland and the South Island's Central Otago Lakes - a major holiday resort region - remained the least affordable regions - at 56 percent and 45 percent less affordable than the rest of New Zealand respectively.

Auckland's median house price reached a new high in November of 851,944 NZ dollars (617,745 U.S. dollars), a year-on-year rise of 11.4 percent.

"But there are nine regions that show greater annual increases than Auckland," said Squires.

"For example, median house prices in Central Otago Lakes have increased by 31.9 percent over the past 12 months, while Nelson-Marlborough has increased by 24.3 percent and house prices in Taranaki have increased by nearly 20 percent."

The ratio of median house prices to median wages in New Zealand remained very high, continuing to put strain on first home buyers, especially in the country's two most expensive regions.

"When you look at the national figures, New Zealand's house price to annual wages ratio shows a slight deterioration to 8.7, but the figures for Auckland and Central Otago Lakes are 13.6 and 12.6 respectively," said Squires.

Steady reductions in the Reserve Bank of New Zealand's (RBNZ) official cash rate - currently at a record low 1.75 percent - over 2016 equated to an 11-percent reduction in mortgage interest costs, easing the burden for home owners.

"But more stringent deposit requirements and tougher rules for bank lending could start to reverse this trend, especially for first-home buyers," said Squires.

The RBNZ has repeatedly warned that rising home prices are posing a risk to the country's financial security. Endit