Housing affordability worsens
Housing affordability is getting worse, with prices now seven times the median household income for a median house.
Research group Demographia’s annual survey shows New Zealand has a ‘‘median multiple’’ of 7 – up from 6.5 the year before. The survey, which monitors cities in eight countries, found Auckland was the sixth most unaffordable major market, level-pegging with Toronto at 8.6.
But Tauranga beat Auckland with a price-to-income ratio of 9.3.
Of just over 300 cities, it was fifth, beaten only by Hong Kong, Vancouver, Sydney and Melbourne.
Hugh Pavletich, the report’s Christchurch-based co-author, said housing affordability should have improved because the Auckland market flattened for some months. Instead it went the other way because of rising prices in Wellington, Dunedin, Hamilton and Tauranga. He put the situation largely down to council inaction. ‘‘They just have not allowed enough land to meet demand,’’ he said.
‘‘We are by a country mile the worst in the hemisphere. Australia is about 5.9 in comparison.’’
The survey defined ‘‘affordable’’ housing as three times or less than the median income – a ratio not seen here since the early 1990s. All of the eight New Zealand markets were above 5.1, making them ‘‘severely unaffordable’’. However, one centre – Christchurch – was ‘‘becoming quietly more and more affordable’’ because of an increase in housing supply, Pavletich said. Christchurch houses cost buyers 5.4 times the median income.
The other cities were Wellington (6.8), Palmerston North (6.0),
Dunedin (6.9), Hamilton (7.0) and Napier-hastings (7.4).
While geography can be a barrier to land release, Pavletich said there was also was a reluctance by some councils to fund the necessary infrastructure.
The good news was New Zealand was moving in the right direction with regard to planning, particularly the Urban Development national policy statement passed late last year.
The report’s most unaffordable city was Hong Kong, with housing 20.8 times the median income, well ahead of Vancouver (11.9) and Sydney (11.0).
Only 10 markets were deemed affordable and they were all in the United States.
Demographia’s figures were drawn from the September quarter of last year and do not capture the recent pick-up in house prices.
‘‘[The councils] just have not allowed enough land to meet demand.’’ Hugh Pavletich Report co-author