City houses 'severely unaffordable'

Last updated 08:08 22/01/2013

Related Links

Warning for buyers as rates descend

Relevant offers

Industries

Big Oil eyes public pressure as banned crude export solution Alex Swney pleads guilty to defrauding Heart of the City Rio Tinto reveals surprise 12pc export drop The dangers of deep sea oil drilling: NZ’s shocking safety record revealed Chinese banking giant breaches Reserve Bank rules BMW cuts production in China Dirt, arsenic and lead polluting air in industrial Christchurch High returns unsustainable after solid March quarter Tower strengthens its Canterbury rebuild reinsurance cover RB rate seen on hold with annual inflation just 0.1 per cent

Home affordability in New Zealand's cities deteriorated last year with the average metropolitan house costing 5.3 times the average income, up from 5.2 last year, sending them further up the "severely unaffordable" index.

The 2013 9th Annual Demographia International Housing Affordability Survey covers 337 urban markets in the United States, United Kingdom, Canada, Australia, New Zealand, Ireland and Hong Kong.

It uses a "median multiple" - where the median house price is divided by the gross annual median household income. In affordable and normal housing markets, house prices do not exceed 3.0 times annual household incomes. The survey rates affordability as severely unaffordable at 5.1 and over, seriously unaffordable at 4.1 to 5.0 and moderately unaffordable at 3.1 to 4.0

A level over 5.1 indicates there are political and regulatory impediments to the supply of new housing that need to be dealt with, the survey authors said.

Not surprisingly, Auckland is the least affordable market, with a median multiple of 6.7. Christchurch (6.6), Tauranga-Western Bay of Plenty (5.9), Wellington (5.4) and Dunedin (5.1) also rate as severely unaffordable.

Three metropolitan areas were "seriously unaffordable": Palmerston North (4.4), Napier-Hastings (4.5) and Hamilton (4.7).

New Zealand had no affordable markets and no moderately unaffordable markets, the survey showed.

Finance Minister Bill English tackles the issue of affordable housing in the study's introduction, saying the Government was focusing on four structural impediments in order to restore affordable housing in New Zealand: land supply, infrastructure, process and construction costs.

He also told Radio New Zealand this morning that the Government was "focused on working with councils" to make housing more affordable. He said Treasury forecasts showed house prices could continue rising this year but that a lift in supply could see prices level off after that.

Internationally, housing affordability was little changed in 2012, with the most affordable markets being in the United States, Canada and Ireland. The United Kingdom, Australia and New Zealand continue to experience pervasive unaffordability, while the least affordable market is Hong Kong.

''Houses in New Zealand are now nearly 80 per cent more expensive than the historic affordability housing norm of 3.0, last experienced in the 1990s,'' the survey said.

Ad Feedback

- Stuff

Comments

Special offers

Featured Promotions

Sponsored Content