City’s claim to costly fame
Tauranga has world’s eighth most expensive housing market compared with income
Tauranga is ranked the eighth costliest housing market in the world when measured against income, heading off cities like London and San Francisco, according to a new global study.
The 15th annual Demographia International Housing Affordability Study compared house prices with incomes in New Zealand, Australia, Canada, Hong Kong, Ireland, Japan, Singapore, Britain and the United States and found Tauranga had again out-stripped Auckland as this country’s least affordable.
The world’s most expensive city is Hong Kong, followed by Vancouver, Sydney, Melbourne, Santa Cruz, San Jose, Los Angeles — and Tauranga.
Tauranga residents have a median household income of $68,800 a year, yet its houses are a median $623,000, meaning it would take people in that city just over nine years to pay off a house, were they to pour every cent into their repayments.
In Auckland, it takes a slightly shorter time because although its houses are a median $845,000, the median household income is $94,400 a year, Demographia said.
Hamilton-Waikato is next least affordable, then Napier-Hastings, Wellington, Dunedin, Christchurch and Palmerston North-Manawatu.
“New Zealand’s housing affordability has a severely unaffordable median multiple of 6.5,” Demographia said. That is, using all of a household income, it would take six-and-a-half years to pay off a median-priced home in this country.
The study blamed what it called “urban containment policies” or ringfencing cities, which it said had led to a land scarcity and pushed up house prices. Housing had been unaffordable in this country for the past quarter of a century, it said.
“Public opinion placed the issue of housing affordability to the top of the policy agenda in the last three national elections,” the study noted.
It noted the Labour Party’s urban growth agenda called for intensified residential development on both greenfield and infill sites.
Economists have noted in the years the Demographia study has been published that NZ had relatively low household income levels compared with many other nations and particularly those in the survey.
OneRoof editor Owen Vaughan said the report showed what had previously been seen as an Aucklandonly problem had spread to the rest of the country.
“Tauranga’s median price has almost doubled in the last five years, fuelled in part by a rapid influx of Aucklanders — retirees and workers — who looked to take advantage of the city’s lower prices,” he said.
“It should be no surprise that Tauranga, with its strong local economy, beachside location and easy lifestyle, should be such a desirable location for Kiwis.”
“However, like we’re seeing in Auckland, the growth in prices in Tauranga has slowed and will ease affordability pressures in the market.”
It is the second year running Tauranga was ranked less affordable than Auckland, but mayor Greg Brownless suspected the statistics behind the study did not tell the real story.
“To my mind, no way is it the eighth most unaffordable city in the world,” he said.
“Tauranga is not known for having a lot of high-paying jobs, but . . . remember some people have retired here having made their money.”
This wouldn’t be reflected in median income statistics, he said.
Brownless would have no problems if the city’s housing prices fell a little because it was “unfair on people just getting a start”.
But he wanted to see investment in transport before new housing developments were opened up to offer cheaper housing. “What we’ve said to Government is that the two go hand-in-hand, and until they are prepared to invest money into transport then we are not keen on more housing areas opening up,” he said.
Nick Goodall, head of research for analysts Core Logic, said there was a fair bit of infrastructure and housing development taking place in the city.
“That is trying to catch up because it probably hasn’t had the development it required years ago . . . But it does take a while to take effect.”