News & Research

CoreLogic Insights: Measuring New Zealand’s Housing Affordability

18 May 2017

The Ministry of Business, Innovation and Employment (MBIE) has announced a new measure for housing affordability and it’s being referred to as a ‘world first’. CoreLogic is proud to be providing data that forms part of this measure.

The Housing Affordability Measure (HAM) will eventually be released quarterly and aims to deliver a more accurate understanding of how much is spent on housing by New Zealanders. It also tracks the factual reality behind the age-old debate currently raging between millennials and baby boomers - whether housing is becoming more (or less) affordable over time for those renting, and for first home buyers too.

Having a more robust picture of affordability will in turn help better inform government policies and decisions around housing for New Zealanders. CoreLogic is proud to be providing data that forms part of this measure, alongside Statistics NZ, the Reserve Bank of NZ, the tenancy bond database and other data such as housing service costs, social welfare and tax data. 

What the first measure tells us:

So, what does the very first measure show? The first available data is captured from March 2003 - June 2015 and shows that unsurprisingly it’s more unaffordable to buy than rent. But perhaps more importantly, it highlights that nationwide housing affordability has remained relatively stable since 2009. 

This is despite strong property value growth occurring in this time. From early 2012, when the average property value was roughly $400,000, to the middle of 2015 (when the HAM series ends) values have increased by 30% ($520,000), yet the affordability measure hardly moved. 

The lack of change in affordability is mostly due to persistently low interest rates during this time and is further verified when analysing first home buyer activity during this period. According to the CoreLogic Buyer Classification series, first home buyers nationwide accounted for between 17% and 20% throughout this time, the only major shift occurring after the first round of loan-to-value restrictions were introduced by the Reserve Bank in late 2013. 

How this measure will be used:

CoreLogic Senior Research Analyst, Nick Goodall comments: “It’s really important to understand that this series is experimental and is undergoing a period of user testing. MBIE have been very clear that the measure maps the shifts in affordability over time but does not define the percentage of households able to afford a home, because the term ‘affordable housing’ can be very subjective. We consider that when used in conjunction with other measures/reporting, it will be a very useful tool for understanding the property and rental markets and the forces driving them”. 

CoreLogic GM – Sales, Dougal Macdiarmid comments: “We’re pleased to be able support such an important measure for NZ. CoreLogic works hard to collect, match and curate data from many sources the result of which is a highly accurate, complete and reliable data set.” 

You can read the first report using HAM here.

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