The most- and least - affordable places to buy property
An international study on housing affordability has identified Palmerston North as the best place in New Zealand to buy a property.
The annual Demographia survey ranked Auckland as ‘‘severely’’ unaffordable – the ninth worst out of 92 major housing markets surveyed in nine countries – with Tauranga even worse.
Although it would cost 8.8 years worth of the median household income to buy a median house in Auckland, the calculation for Palmerston North worked out at 4.5 years.
Survey co-author Hugh Pavletich said to be affordable, housing should cost only three times the median income.
‘‘Severely unaffordable’’ was five times the median income. Across New Zealand housing costs about 5.8 times the median income in most of the major cities.
‘‘Auckland and Tauranga are way above that,’’ he said.
Christchurch and Dunedin, on 5.4, and Wellington, on 5.5, were also severely unaffordable.
The Palmerston North figures were based on a median house price of $278,000, as at the end of September, and an annual income of $62,000.
Real Estate Institute of New Zealand figures put the median price at $360,000 at the end of December, in a market boosted by the sale of three $1 million-plus properties in a month.
‘‘They are a bit behind with the statistics,’’ said institute spokesman Andy Stewart.
‘‘But Palmerston North is still one of the most affordable in terms of property and the lifestyle you get. You can still buy a really good home for under $350,000.’’
QV property consultant Jason Hockly said he was not a great fan of affordability studies, but agreed a house in Palmerston North was more affordable than in most New Zealand cities.
He believed talk of a housing crisis in New Zealand was overhyped.
‘‘If things are so unaffordable, how do so many market purchasers afford to buy houses in an increasing market?
‘‘Surely, if things are so unaffordable, house prices could not be able to increase at the rate they are.’’
He said the problem was lack of financial literacy, with people making choices about buying houses when they could not afford them.
Meanwhile, Tauranga’s unaffordability has not come as a surprise to its residents, who’ve noticed growing housing prices and low wages.
According to Demographia’s latest international housing affordability survey, the city is now New Zealand’s most unaffordable.
Tauranga residents must spend 8.9 times their annual household income to buy a house.
Tauranga’s Neighbourhood Residents Association spokesman Phil Green said the salary gap between the urban centres and more people moving to the city from Auckland and Wellington had contributed to its unaffordability.
‘‘Our housing prices have been spiralling upwards for years,’’ Green said.