PHOTO: Property data firm Cotality has released its latest housing affordability report. FILE
📉Housing Affordability Finally Improving
After years of runaway prices, new data shows that the average time needed to save a house deposit in New Zealand has dropped to 10 years, down from nearly 14 years in 2021. While this is a positive shift, property experts caution that homes are still far from affordable.
Property data firm Cotality has released its latest housing affordability report, with chief property economist Kelvin Davidson noting that prices are still 17% below their peak, but the national value-to-income ratio of 7.5 is the lowest since mid-2019.
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⏱️ Time to Save a Deposit
- 🇳🇿 National average: 10 years (long-term average = 9.1 years)
- 🏙️ Auckland: 10.5 years (lowest in years, back to long-term average)
- 🌊 Tauranga: 11.3 years (still the least affordable major centre)
- 🏛️ Wellington: Improved significantly, back to long-term affordability norms
Hamilton and Christchurch haven’t seen the same progress due to smaller drops in property values.
💸 Mortgage vs Income
Mortgage repayments on a typical house now consume 44% of median household income, compared to a peak of 57% in 2022. That’s the lowest burden since early 2021 and close to long-term norms.
Davidson explains: “Servicing costs at or near their long-term average suggest that affordability is no longer the handbrake it was during the downturn.”
📊 Regional Breakdown
- Auckland: Value-to-income ratio at 7.9, lowest in a decade
- Wellington: Ratio at 6.4, back to its long-run average (first time since 2016)
- Tauranga: Still the most expensive city relative to incomes
- Hamilton & Christchurch: Little affordability relief due to smaller price corrections
Davidson says: “The fact that key measures are now back at long-term norms in a number of key centres is a clear sign of how far conditions have adjusted.”
🏠 Buyers vs Renters
While affordability for buyers has improved, renters continue to struggle. Nationwide, rents are 28% of income, compared to a long-term average of 26%.
- 🔺 Hamilton, Christchurch, Dunedin renters: Nearly 30% of income spent on rent (3 points above normal)
- ⚖️ Auckland & Wellington renters: Closer to historical norms
Davidson adds: “Renting is still very challenging, and many renters are paying average rents without earning average incomes, making the squeeze even worse.”
🔮 The Outlook
New Zealand’s housing market has “returned to normality” by several affordability measures, but Davidson warns it won’t mean a return to cheap housing.
“The last couple of years of flat or falling prices, rising incomes, and lower interest rates have combined to improve affordability to its best point in five or six years. If we’re going to truly fix housing affordability, now is probably the best opportunity we’ve got.”