Tauranga NZ's second most unaffordable city

Mayor Stuart Crosby says we can't ignore the growing gap between income and house prices.

A combination of low incomes and high house prices has seen Tauranga branded the second most unaffordable New Zealand city, behind Auckland.

The Demographia International Housing Affordability Survey out yesterday showed median Tauranga house prices up by $15,700 from $349,100 in 2012 to $364,800 in 2013.

Median incomes dropped by $4600 during the same time period, from $59,600 to $55,000.

The survey gave Tauranga a total city median multiple of 6.6 (house prices divided by income), when anything more than three is regarded as unaffordable.

Auckland was named the most unaffordable city in New Zealand to live in, with a rating of 8, after house prices went up $54,900 and median household incomes fell by $4700 in that year.

Auckland was the 347th most unaffordable out of 360 worldwide. Tauranga was rated 331st most unaffordable.

Overall, housing in New Zealand was "severely unaffordable", with a median multiple of 5.5.

Tauranga Mayor Stuart Crosby said the survey was not surprising but he added: "This is but one indicator, one measurement and cannot be viewed as the full story.

"It is a double-edged sword. On one side, if you have a house an increase in value is a good thing, it means more equity. But if you are trying to get on to or stay on the property ladder while dealing with a low income, it can be very challenging."

Mr Crosby said the council was trying to increase wages locally by driving a strong economy through infrastructure.

"By doing that, we will attract the right kind of business to our city," he said. "Our philosophy on affordable housing is that ratepayers' input should be low. Ratepayers should not subsidise people on to the property market but we do what we can to keep costs down, by keeping developer contribution to a minimum."

Demographia sourced its New Zealand housing data from the Real Estate Institute and the incomes from Statistics NZ.