Last year, Demographia found Auckland the world's fifth least affordable city. Melbourne was in fourth place but the Victorian city has now moved to sixth place, meaning affordability there has improved.
"Auckland, New Zealand's only major housing market, has a severely unaffordable 10 median multiple," Demographia said.
Since 2004, when the first survey was conducted, Auckland's unaffordability measure had nearly doubled, from a multiple of 5.9 to 10, it said.
People are demanding a change: "Public opinion placed the issue of housing affordability near the top of the policy agency," the report said.
HOW THEY REACTED
■ Nick Smith, Building and Construction Minister:
"The Government is making good progress in addressing excessive house-price inflation in Auckland, with the latest annual increase in single digits for the first time in five years and new housing investment up 32 per cent in the latest year and now topping more than 10,000 new Auckland homes per year.
"We are confident our comprehensive plan, which includes addressing issues like Auckland's planning rules, reforming the Resource Management Act, increasing land supply with Special Housing Areas, the Crown Land Programme and providing record levels of assistance for first-home buyers with the KiwiSaver HomeStart scheme, will achieve more affordable housing for cities like Auckland," Smith said.
■ Phil Goff, Auckland Mayor:
"Auckland is one of the least affordable cities in the world to buy a home and in the last couple of years it has got steadily worse.
"The reason is obvious. Our population in the city has gone up by 45,000 a year. We need about 15,000 extra houses a year and are only building about half that number. Supply is falling far short of demand and that puts prices up. In that environment we are also getting speculative pressures with houses being flipped and going up by hundreds of thousands of dollars in a day as speculators clip the ticket.
"Council has addressed the problem of not having enough land to build on with the Unitary Plan which, once the appeals process is dealt with, will enable the construction of 422,000 housing units on brownfields developments and 150,000 units on greenfields sites. That should provide an ample supply of land which is the highest cost factor in Auckland housing.
"I am also setting up a housing task force to bring together the private sector, central and local government. Its terms of reference are to identify constraints and barriers to increasing the supply of housing as quickly as possible, and look at the options available to address those barriers and make recommendations to resolve them.
"I also want to work closely with Government to deal with the deficit in infrastructure funding so we can put the services and transport links in place to enable houses to be built."
■ Andrew Little, Labour Party leader:
"Skyrocketing house prices coupled with low wage growth have pushed Auckland from fifth to fourth place as one of the least affordable housing markets in the world.
"Overall, eight cities in New Zealand are identified as seriously or severely unaffordable.
"It's clear that National has run out of ideas - its piecemeal attempts to increase housing supply are failing. National's Auckland Housing Accord failed to meet its targets, its attempt to reduce building materials prices led to prices increasing, and its RMA reforms have been a shambles," Little said.
"The government I lead will build 100,000 new homes under KiwiBuild and crack down on the speculators who are jacking up prices.
■ Gareth Kiernan, Infometrics chief forecaster:
"It's not too surprising that Auckland affordability has worsened over the last year. House-price inflation in the city has still been running in double digits, well ahead of income growth. In fact, I would have thought the lift in the median multiple might have been more than from 9.7 in last year's report to 10.0 now.
Factors behind the worsening situation include:
* Low interest rates - the very low mortgage rates on offer have limited the extent of increases in debt-servicing costs. However, future interest rate rises of 1.5-2.0 percentage points could leave many mortgage-holders in Auckland unable to meet their repayments.
* The persistent and still worsening undersupply of housing in Auckland - dwelling consent numbers in Auckland have totalled 10,137 over the year to November, well below the 14,000-15,000 needed to keep up with underlying demand. "With population growth and net migration remaining strong, this demand is placing significant stresses on the housing market in Auckland," Kiernan said.
"This is not to say that zoning does not play a role as well. The Auckland Unitary Plan's push towards greater densification should hopefully start to pay dividends over the next couple of years and lead to a significant increase in the city's supply of new dwellings. Given high land prices in Auckland, increased densification (and therefore less land associated with each individual dwelling) is one way to change the affordability equation over the medium term," Kiernan said.
WORLD'S LEAST AFFORDABLE CITIES
House price/household income comparison
Rank/market/median price/household income multiple (price compared to income)
1. Hong Kong $5,422,000 $300,000 18.1
2. Sydney $1,077,000 $88,000 12.2
3. Vancouver $830,100 $70,500 11.8
4. Auckland $830,800 $83,000 10
* Read more in today's Business Herald
Read the Demographia report here:
