Wellington, Jan 7 NZPA - Housing continued to become more affordable in the three months to the end of November, according to Massey University, but there are signs the improving trend could be nearing an end.

The university today said its national affordability index improved by 2.6 percent to a reading of 25.7 in the quarter ending November 30, from 26.5 in the August quarter.

The November quarter recorded a 0.3 percent increase in the average weekly wage, a 2.3 percent increase in the national median house price and a 4.5 percent reduction in the average weighted mortgage interest rate.

But Professor Bob Hargreaves, who compiles the report, said a more hawkish statement recently from the Reserve Bank made it increasingly unlikely the current low interest rate environment would be sustainable through 2010.

During the last quarter eight of 12 regions showed improvements in affordability, led by Taranaki with 14.8 percent, Central Otago Lakes 13.5 percent and Southland 11 percent.

Northland had the largest reduction in affordability, with a 15 percent change, and for the first time was one of the three least affordable regions with an index at 104.8 percent of the national average.

Least affordable was Central Otago Lakes on 135.9 percent, followed by Auckland at 124.9 percent, while Southland retains its place as the most affordable region with an index of 58.8 percent of the national average.

Prof Hargreaves said the national index had peaked at 33.86 in November 2007, around the time the real estate market peaked, and had been in a "pretty steady" decline since.

He expected affordability would worsen due to rising interest rates, while he did not expect house prices to fall and they could still rise further.

Something of a shortage of housing was emerging, building costs were going up, and net migration was still fairly positive, Prof Hargreaves said.

Worsening affordability in Northland could partly be to do with people moving there from Auckland.

On an annual basis, the all districts national affordability index improved by 20.3 percent, led by a 34.1 percent improvement for Central Otago Lakes, and a 27.7 percent improvement for Hawke's Bay.