Zoning rules see NZ among least affordable places to buy a home
New Zealand cities remain among the least affordable in the world – and the culprit is mainly due to “green belt” policies by local authorities.
New Zealand ranks just behind Australia as one of the two most unaffordable countries among those measured by the sixth Annual Demographia International Housing Affordability Survey covering 272 urban markets in Australia, Canada, Ireland, New Zealand, the UK and the US.
The study uses annual household income as a measure.
The authors, Christchurch-based Hugh Pavletich and US-based Wendell Cox, classify homes as affordable where households spend about three times their annual income to purchase a house with a mortgage not exceeding approximately 2.5 times their annual household income.
Moderately unaffordable homes are classed as four times and under; seriously unaffordable five times and under; and severely unaffordable 5.1 times and above.
On this measure, New Zealand has no affordable cities. On an overall national basis, New Zealand’s median multiple is 5.7 times (compared with about 3 in the early 1990s), while Australia is tops at 6.8 times and the UK 5.1 while the US is 2.9 overall.
At a city level, Tauranga is the most severely unaffordable market in New Zealand at 6.8 times (the highest international score is taken by Vancouver at 9.3 times followed by Sydney at 9.1 times).
Second in New Zealand is Auckland at 6.7 followed by Christchurch at 6.1, Wellington 5.8 and Dunedin 5.6.
The preface to this year’s Demographia Survey has been contributed by Dr Tony Recsei, president of the New South Wales, Australia, community organisation, Save Our Suburbs.
He is an environmental consultant, who debunks many of the “environmental myths” associated with urban housing markets – that higher density housing reduces pollution, is more efficient, and saves energy.
Dr Recsei says that national and local government policies are consigning a new generation of citizens to renting homes for their lifetimes.
• The issue will be further explored in this week’s print edition of The National Business Review, which will look at which councils are developing green belt policies that exacerbate the problem.