House prices to income ratio 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, levelpegging with Toronto at 8.6.
But Tauranga beat Auckland with a price-to-income ratio of 9.3.
Of about 300 cities, it was fifth, beaten 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.
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, Christchurch was ‘‘becoming quietly more and more affordable’’ because of an increase in housing supply, Pavletich said.
Christchurch houses cost 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).
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.