Wellington homes "severely unaffordable"

Last updated 13:05 22/01/2013

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Buying a home in Wellington is ''severely unaffordable'', an international survey has shown.

The 2013 9th Annual Demographia International Housing Affordability Survey has shown an average metropolitan home in Wellington now costs 5.4 times the average wage.

The worst place in New Zealand was Auckland, where homes averaged 6.7 times the average wage.

But all the major centres covered in New Zealand - Auckland, Christchurch, Dunedin, Tauranga-Western Bay of Plenty, and Wellington - now cost 5.1 times the average income or more, meaning the whole country was ranked as ''severely unaffordable''.

The national average this year is 5.3 times the national average - a 0.1 percentage point increase on last year.

The 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.

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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.

- The Dominion Post

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