Funds needed for councils to free up land for housing - Infrastructure NZ

Paul Blair, chief executive of Infrastructure NZ, said "the challenge of building enough homes is an enormous problem". Photo / 123RF

A report showing nationwide housing unaffordability highlights problems with how central and local government operate, Infrastructure New Zealand says.

The Demographia International Housing Affordability Survey showed New Zealand has a market median multiple of seven, meaning the median market price is more than seven times the median income. This classes New Zealand as "severely unaffordable" and the second-worst of eight countries surveyed.

"Unfortunately this news is no surprise. It confirms that the problem is New Zealand-wide, and not limited to large or fast-growing cities like Auckland," said Paul Blair, chief executive of Infrastructure NZ.

"From Dunedin to Auckland, the challenge of building enough homes is an enormous problem, and it's primarily because councils are unable to pay for the infrastructure needed to bring down land prices," he said.

The industry organisation said the problem is that while local councils build and maintain about 40 per cent of the nation's infrastructure, they only have about a tenth of the money central government has.

"As our towns and cities grow, central government enjoys the benefit of this economic growth, while councils are legally restricted to only recovering their costs.

He said council debt constraints add to the problem and restrict local authorities from investing in infrastructure.

The lobby group wants a series of partnerships between central governments and local councils including local bodies being given more government money in return for freeing up infrastructure serviced land for housing.

"Incentivising local councils with a share of the dividends from economic growth so they can invest in infrastructure to create more economic growth and free up land for housing just makes sense," he said.

The other nations covered in Demographia report were Hong Kong, Australia, Canada, Ireland, Singapore, the United Kingdom and the United States.

All eight New Zealand cities surveyed fell into the "severely unaffordable" category, which has a rating of more than 5.1.

The most unaffordable was Tauranga at 9.3 and the lowest was Christchurch at 5.4. In Auckland, the multiple was 8.6, while in Wellington it was 6.8.

Countries with better housing affordability ratings include the United States, where the median market multiple was 3.9, and Canada where it was 4.4.