A place to call home

As Auckland is rated the world’s fourth least affordable city, CEOs express concern

Housing affordability featured highly the Herald CEO survey, rating as the fourth greatest domestic factor impacting business confidence. CEOs scored the issue at 7.1/10 (where 1= no concern and 10 = extremely concerned).

This year the annual Demographia International Housing Affordability Survey rated Auckland as the world’s fourth least affordable city for housing, behind Hong Kong, Sydney and Vancouver.

In Auckland, the median house price is around 10 times the median household income, which is considerably higher than the threshold for affordable housing (three times median income), and as a result, home ownership rates are at record lows.

Housing unaffordability was also mentioned by most chief executives when asked more generally to outline the top three issues that are currently facing the nation.

But they are divided on whether there needs to be further intervention to constrain house price growth: 41 per cent say Yes, 55 per cent say No, and 4 per cent were in the don’t know camp.

Many respondents, including MinterEllison’s Cathy Quinn, believe the market is self-correcting: “The market is and will address itself.”

A real estate boss agrees, “the restrictions have proved successful and in my mind first home buyers need to be relaxed now.”

Business NZ CEO Kirk Hope says funding and demand factors must be aligned to ensure development can occur. “Measures to constrain demand do not fix the problem, they may provide more time to increase supply whilst restraining house price inflation,” he says.

When asked the best way to constrain house price growth, the top three options were: funding a major Government housing programme to provide affordable housing in Auckland — favoured by 50.5 per cent, bringing in a Vancouver-style foreign property buyers tax/stamp duty on all residential property transactions in Auckland (48.6 per cent) and giving urban authorities power to bypass local politicians to ensure new supply (40.0 per cent).

Infrastructure New Zealand CEO Stephen Selwood believes current