House prices still 'seriously unaffordable'
Hamilton and Miami neck and neck in housing stakes, Daniel Adams reports.
Riverside in Hamilton or under a palm tree in Miami - the cost is comparable, according to a new international survey that puts Waikato prices in the same league as some exotic locales.
The city has been rated among the country's most affordable urban areas, but internationally it is still "seriously unaffordable", the newly published 2013 9th Annual Demographia International Housing Affordability Survey shows.
The survey covers 337 urban property markets in the United States, United Kingdom, Canada, Australia, New Zealand, Ireland and Hong Kong, comparing median home prices with the median household income.
The study shows that Hamilton's affordability is on a par with Glasgow, with median house prices 4.7 times the city's $63,900 median household income. The city's rating puts it below the slightly-more-affordable charms of Mildura in Victoria, Australia, and Swansea in Wales, where house prices are both 4.6 times median income, but above the less affordable outpost of Townsville in Queensland, Australia, with a score of 4.8.
But if you are looking for something a little more exotic, the Miami-West Palm Beach area in Florida came in more affordable than Hamilton with house prices 4.5 times household income.
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 survey 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. It assesses affordability as severely unaffordable above 5.1, 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 authors say.
For New Zealand, 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 rated as severely unaffordable.
Three metropolitan areas were "seriously unaffordable": Palmerston North (4.4), Napier-Hastings (4.5) and Hamilton (4.7). New Zealand has no affordable or moderately unaffordable markets, the survey shows.
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.
Finance Minister Bill English said land had been made artificially scarce by regulation that locked up land for development.
When demand shocks happened, as they did in the mid-2000s, much of that shock translated to higher prices rather than more houses.
"It simply takes too long to make new land available for development," Mr English said.
He was worried a repeat demand shock might be starting. As interest rates stayed below historic norms, expectations were shifting that those rates were here to stay, he said.
"As a result, demand for real assets has increased, observed in booming equities markets in 2012. Demand for real estate is also increasing, with the median house price in Auckland recently exceeding the highs of 2007."
Mr English said the Government was focused on working with councils to get enough houses on to the market to meet demand.
Labour has proposed building 100,000 basic homes for first-home buyers, focusing on Auckland, over 10 years.
Labour leader David Shearer said Mr English's comment that the planning system would have to be dramatically changed for opposition housing policy to go ahead was "absolute nonsense".
He had seen affordable houses built for $300,000 to $350,000.