Tauranga now most unaffordable place in New Zealand to buy a home: Global survey

Multimedia Journalist, Bay of Plenty Times·Bay of Plenty Times·

21 Jan, 2018 04:01 PM4 mins to read

Tauranga now most unaffordable city in terms of time to pay off a house on median income. Photo/George Novak

Tauranga has out-ranked Auckland as New Zealand's most unaffordable city to buy a new home, according to a major global study.

The annual Demographia International Housing Affordability Survey released todayshowed Tauranga was the most expensive city to buy a home in New Zealand, ahead of Auckland.

The survey compared the median household income to median house prices to calculate how many years it would take to pay off a median-priced house.

People in Tauranga would have to spend nearly nine years of their full household income to buy a median-priced house, compared to 8.8 years in Auckland, the survey showed.

In a sample of 293 cities, Tauranga now featured as the 12th least affordable behind cities such Hong Kong, Sydney, Vancouver and Melbourne.

Latest figures from QV showed Tauranga home values increased 3.2 per cent year on year, or $21,528, from an average value of $672,197 in December 2016 to $693,725 last month.

Tauranga Harcourts managing director Simon Martin said the survey results were "skewed" as they only focused on median-priced houses, which had been influenced by the LVR restrictions.

Mr Martin said Tauranga's median sale price overall had increased because there were a lot fewer properties available for purchase by first-home buyers and smaller investors.

"First-home buyers don't buy houses in the median price bracket and most would be looking to buy in the $390,000 to $400,000 price range," he said.

Tauranga Budget Advisory Service manager Diane Bruin said the survey confirmed what she and others had already known.

Bruin said household incomes in Tauranga would never match those in Auckland where there were a lot more specialised jobs offering higher pay rates.

Rental prices were also on the rise in the face of fast-growing demand and in some cases the rents people had to pay now were "quite astronomical".

But Tauranga was clearly still an attractive place to live and work and many people moved here and stayed because of the great lifestyle the Bay offered, she said.

Anton Jones, First National Mount Maunganui, Tauranga and Omokoroa owner, said he agreed with Mr Martin that the survey was a "pretty blunt" measurement tool.

"You need to ask yourself whether our house prices are too expensive or our wages are too low, and it seems it's both," he said.

Jones said the LVR restrictions triggered a significant change in the housing market particularly in terms of availability of the homes being offered in the lower price bracket.

Despite that Tauranga was still a great place to live and work and the huge number of people wanting to move to this area was proof of that, he said.

Tauranga Mayor Greg Brownless said the housing market in New Zealand was "out of kilter" when it came to house prices and affordability.

Tauranga was never going to be able to compete with Auckland wages and the city also had a larger percentage of pensioners.

"If this survey helps discourage some Aucklanders from coming here so Tauranga people can have the chance to catch up in the housing market that's got to be a good thing."

The Labour Government's foreshadowed policy to stopped foreign-based buyers from snapping up homes was also "a good start" to make it fairer for residents.