World’s most unaffordable house prices found in New Zealand

Country: New Zealand

23rd January 2008

A survey conducted by research company, Demographia, reveals that housing affordability in New Zealand has fallen radically, as New Zealanders face the biggest disparity between actual earnings and house prices. Demographia says that it now takes an average of 18.6 years of a household's entire annual income to pay for the median priced property in New Zealand.

Concerns about domestic spending, particularly in the housing market, spurred the Reserve Bank of New Zealand to raise its base rate by 1% to 8.25% last year. With rates generally expected to remain unchanged throughout most of 2008, average property prices may now fall over the coming months. The latest data from the Real Estate Institute of New Zealand reveals that annual property price growth in New Zealand slowed to 6.7% last month to NZ$352,000 (£135,000).

Blue Hancock, spokesman for the government agency Quotable Value reportedly said in a statement: “The cost of borrowing and slowing immigration has softened demand. There is nothing in our statistics to suggest that this trend will not continue into 2008, with the spring market having failed to provide the usual resurgence.”

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