Part of the kiwi dream is to own your own home. Unfortunately since 1991, housing affordability in New Zealand has declined substantially.
According to the 6th Annual Demographia International Housing Affordability Survey, published last year, New Zealand’s house prices in major cities are almost twice the considered affordable median. This puts us in the ‘severely unaffordable’ category. Hugh Pavletich has highlighted this in his recent press release stating “Our poor affordability performance is illustrated year after year, where currently our major cities housing is approximately 5.7 times annual gross household income. House prices should not exceed 3 times annual household income’.
Out of the six countries and the 272 areas surveyed, New Zealand’s best placing in the Housing affordability rankings was 188 (Palmerston North – Manawatu at 4.6). New Zealand is ranked fifth out of the six countries for the most unaffordable housing behind the United States (2.9), Canada (3.7), Ireland (3.7) and the United Kingdom (5.1). Australia has the most unaffordable housing with a median of 6.8.
It has only been in the last few years that the government has started to seriously address this issue. The establishment of the Urban Technical Advisory Group and the Commerce Committee Housing Affordability Inquiry has brought this issue a bit more into the spotlight and we are currently waiting on the report from the Urban Technical Advisory Group to be released. Hopefully this will provide a foundation for some progress to start on getting governance and responsible regulatory administration in place. But as Pavletich points out ‘the government and public bureaucracies at all levels are a reflection of us’.
The Housing Affordability Survey also mentions that local authorities of New Zealand have, in effect, established unaffordable housing as an objective of public policy, however unwittingly and that these authorities should adopt performance programs that include easily understood measures (such as the Median Multiple).
So where does this leave us? When the next elections occur, should we be pushing for more tax cuts and rate reductions? Or focusing more on the planning and affordability of our homes and in effect our communities? Do we have to get comfortable with the idea of greater housing intensification – which isn’t always necessarily bad? Or should we just abandon the Kiwi dream of home ownership in favour of other more realistic housing models – long-term tenancies?
Comments welcome.