Author:Auckland Council Chief Economist
Source:Auckland Council Chief Economist's Office
Auckland Economic Commentary
David Norman, Chief Economist
- Housing is the most affordable it has been in five years with flat prices, rising incomes and falling interest rates.
- No capital gains tax will provide a floor under prices falling further.
- Construction’s growth continues unabated, and remains the main driver of Auckland’s economy.
- Meanwhile retail trade growth remains moderate and tourism growth relatively weak.
The big story this quarter is what is happening to house prices and the implications for affordability. Housing in Auckland is still unaffordable for many, but for the median income household, the median priced house has not been this affordable for five years. Our Serviceability Affordability Model, which we have been publishing for two years now, shows the median Auckland household's ability to buy the median house sold, based on household income, interest rates, ability to save a deposit, and the iterative impact that unaffordability has had on household incomes (it artificially pushes up household size, and thus household earnings, precisely because people can't form new households as quickly as they otherwise would).
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