Sharechat Logo

Auckland and Tauranga top New York for unaffordable houses

By Benn Bathgate

Monday 24th January 2011 1 Comment

Text too small?

Housing in New Zealand is "severely unaffordable", with property in Auckland and Tauranga less affordable than New York, according to new research.

The seventh annual Demographia International Housing Affordability Survey examined house prices relative to income across 325 cities and regions and found New Zealand home affordability ranks alongside Australia, Britain, the US, Canada and Ireland.

The survey ranks areas according to income-to-loan ratio, and while the ideal house price is around three times an annual salary in New Zealand it takes 5.3 times the average salary to pay for a house.

In Tauranga that figure rises to 6.5 times the average annual salary while in Auckland it takes 6.4 times.

Purchasing a property in New York takes 6.1 times the average annual salary.

The report cites higher land prices and regulation on the use of land for the rapid rise in property across unaffordable markets.

"The key reason for this land price escalation in Australia (as well as in New Zealand and the UK) is that the market's ability to quickly provide low priced new housing supply is being hampered by restrictive land use regulations, many of which came into effect since the mid-1990s," the report says.

"House prices have skyrocketed principally because of more restrictive land use regulations that have virtually prohibited new house construction on or beyond urban fringe. This is particularly evident where there are 'urban containment' measures, such as urban growth boundaries. Land differentials of ten or more times have been documented immediately across urban growth boundaries (such as in Portland and Auckland)."

Another factor exacerbating the situation is that despite house prices falling, job security and wage rises also lessened.

Survey co-author Hugh Pavletich, from Christchurch, said more land needs to be made available to make housing more affordable and help keep young New Zealanders in the country.

"There is much work to do so that New Zealanders do not have to pay any more than three times their annual household income to house themselves," he said.

"New Zealanders are paying twice what they should be for housing and construction costs are currently twice per square metre what they should be. Due to urban planning degrading the performance of the residential construction sector over the recent decades."

The survey found Tauranga and Auckland the most unaffordable locations in New Zealand, followed by Christchurch (6.0), Wellington (5.5), Dunedin (5.0), Hamilton (5.0), Napier-Hastings (4.7) and Palmerston North (4.1).

"New Zealand has no affordable markets and no moderately unaffordable markets," the report said.

Hong Kong was found to have the most unaffordable housing, with houses costing 11.4 times household income, followed by Sydney at 9.6 and Vancouver at 9.5.

Of the 115 affordable housing markets, all were in Canada or the US, with Atlanta the most affordable major city at 2.3 times income.

Overall, Australia had the least affordable market with a national median multiple of 6.1 times income, followed by New Zealand (5.3), the UK (5.2), Ireland (4.0), Canada (3.4) and the US (3.0).



  General Finance Advertising    

Comments from our readers

On 25 January 2011 at 7:55 am Arty said:
Just confirms what my adult kids are finding. They are savers and hard workers, most distressing for our family.
Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report