We published this firstly in January 2011, what is the case now? House prices in Auckland in particular are so much worse than 2011, how can this be good for our country as a whole?
Monday 24th January 2011 By Benn Bathgate
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.”
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