Last updated 13:00 16/01/2012

Nelson and Marlborough remains the third least affordable region in the country to buy a house, according to the latest home affordability report by Massey University.

Top of the south homes edged a further 2.4 per cent out of reach for house hunters in the three months to November 2011, although over the previous year the region had improved 8.5 per cent.

Auckland was the least affordable region, replacing Central Otago Lakes at the top.

On a national level, affordability dropped 1.9 per cent in the past quarter, driven by a 3 per cent rise in the national median house price.

Report compiler Professor Bob Hargreaves from Massey’s School of Economics and Finance said in light of financial turmoil in Europe, it was surprising that house prices were increasing.

“However, very low mortgage interest rates combined with more relaxed lending criteria are combining to bring more buyers into the market and new construction is still at a very low ebb.”

The home affordability index is calculated using the key drivers of interest rates, wages and house prices. Prof Hargreaves said the outlook for affordability was probably not going to improve, as interest rates would rise again in the long term.