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. An affordable house price is no more than three times an annual salary, according to Demographia. However the average in New Zealand currently is about 5.3 times the average salary.
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).
Source: Landlords.co.nzcomments powered by Disqus