$10,000 drop in house prices helping buyers

The national median house price is $350,000. Photo / Chris Skelton

House prices have fallen nationally $10,000 in the past three months, and affordability is increasing around the country.

Massey University's latest home affordability report, out yesterday, showed the national median house price was $350,000.

Queenstown, Auckland and Wellington are the most expensive places when house prices are matched to average wages and average mortgage interest rates.

Invercargill, Dunedin and Palmerston North are the most affordable.

The director of the university's real estate analysis unit, Professor Bob Hargreaves, said that in the three months to February Central Otago Lakes was the least affordable region, followed by Auckland and Wellington.

Southland retains its place as the most affordable region. Otago is in second place and Manawatu/Wanganui third.

Nationally, home affordability improved in the quarter by 5.2 per cent.

Professor Hargreaves said the figures were good news for house buyers as mortgage rates went down and wages increased.

Average monthly mortgage interest rates decreased from 6.63 per cent to 6.59 per cent, and the average weekly wage increased from $972.69 to $991.05 in the quarter, he said.

"The housing market continues to be characterised by very low turnover rates, flow-on effects from the Christchurch earthquakes, a firming of house prices in Auckland, expectations that mortgage interest rates will remain stable in the short term and an exodus of New Zealanders to Australia," Professor Hargreaves said.

He warned against trusting the Canterbury/Westland figures, which he said showed a small number of house sales in a market disrupted by the earthquakes.

Real Estate Institute figures out last month showed the national housing market staged a modest recovery in February compared with January, but volumes halved in earthquake-hit Canterbury.

The median price of $350,000 was unchanged from February last year but was up $10,000 on January, the institute said.

The institute highlighted the low turnover rates.

In February, 4502 unconditional sales were reported, up 38 per cent on January or up 45 per cent when the Canterbury/Westland region was excluded.

But during the boom period last decade, about 10,000 houses a month were selling.

The Government is also trying to address affordability, establishing the Productivity Commission to investigate and saying debt accumulation and the wealth effects of rising prices during the last decade could have made the recession worse than it otherwise might have been.

The average house is now worth around six times the average annual income, more than double what it was 20 years ago.