First home buyers in Auckland and Central Otago are feeling the strain, with house prices in both now more than 13 times higher than annual wages.

This comes despite median house prices in Central Otago, which includes pricey Queenstown, dropping in the last quarter by $35,000, according to the latest Massey University home affordability report.

Its median house price drop was followed by Northland, down by $30,000, and Wellington, which saw a $28,000 dip.

Even though some prices dropped, nationwide affordability has decreased by 10.5 per cent over the past year and no region has improved in affordability in the 12-month period.

Report author Associate Professor Graham Squires said while Auckland and Central Otago home affordability improved over the past three months, they remained the least affordable regions.

"Median house prices are more than 14 times annual wages for the Central Otago Lakes region, and more than 13 times annual wages for the Auckland region."

He said central Otago is 68 percent less affordable than the rest of the country, followed by Auckland at 50 percent, while Southland and Manawatu-Whanganui remain the country's most affordable.

"Borrowing costs have remained relatively low and wages static, so house prices continue to be the key determining factor in home affordability," Prof Squires said.

The report, which covers the period from June to August, 2017, shows an improvement in national affordability of 2.1 percent for the quarter, driven mainly by the falling house prices in the Northland, Wellington and Central Otago Lakes regions.

Squires from Massey University said this could be driven by a number of factors.

"We've seen some significant falls in house prices in some regions this quarter, so it will be interesting to see if this spreads to other regions in the coming quarter."