The Ministry of Business, Innovation and Employment's Housing Affordability Measure (HAM) was first proposed in 2012 but only saw the light of day for the first time yesterday, partly because of officials' concerns about its political sensitivity.
The first official measure of housing affordability, its findings are stark: four out of five renters in New Zealand cannot not buy a house in their area without going into financial hardship.
The picture is bleaker in Auckland, where unaffordability levels are at 86 per cent, and as high as 96 per cent in the southern suburbs.
Asked about solutions for first-home buyers, Prime Minister Bill English pointed to the HomeStart scheme, which offers people on modest incomes grants of up to $20,000 for their first house.
So far, 27,000 people have received one of the grants, which are available for houses which cost less than $600,000 in Auckland (or $650,000 for a new house). The price cap is lower in other parts of the country.
However, uptake has only risen slightly in Auckland in the last year despite easing of restrictions which mean people can earn more and buy more expensive houses and still qualify for the grant.
The house price limit was raised from $550,000 in Auckland last year because soaring house prices had made the scheme virtually defunct. It had previously been raised from $350,000 to $485,000 in 2013.
Smith said it appeared Auckland house-hunters were holding back until prices stabilised and supply increased. The HomeStart price caps were regularly reviewed to make sure they were realistic, and they could potentially be adjusted again if not enough people were able to access them, he said.
Building and Construction Minister Nick Smith says he is confident house prices in Auckland will flatten out once efforts to lift supply have kicked in. Photo / Supplied
Labour's housing spokesman Phil Twyford said the scheme had not worked in the area that it most needed to.
If property speculation was left unchecked, he said the subsidies would only ever amount to "crumbs" for Auckland buyers because prices would remain too high.
Responding to the new MBIE data yesterday, English denied that the National-led Government's housing plan had been unsuccessful.
He reiterated that the main problem was councils' failure to allow enough houses to be built in the past. Councils were also yet to tap into a $1 billion infrastructure fund, he said.
"We're working with them now to get more houses built so they can be more affordable."
Twyford said the results of MBIE's first report underlined why there was political sensitivity around its publication.
It clearly illustrated the troubling gap between household incomes and housing costs, he said.
Twyford also noted that the affordability data finished in 2015, and affordability levels were likely to have deteriorated further since then.
Q&A
Why is the definition of housing unaffordability?
In the MBIE report, It is defined by how much money a household has left after meeting housing costs. If a renter buying their first house has less than $662 a week (after housing costs), it is considered unaffordable. Add $331 for each extra adult in a household, and $199 for each child.
According to that standard, what proportion of people cannot afford a home in New Zealand?
81 per cent nationwide, and 86 per cent in Auckland (as of mid-2015).
The share of people who were unable to afford a house was 75 per cent in 2003, peaked at 86 per cent in 2008, and has remained steady at around 81 per cent since about 2009.
What about renting?
Renting is unaffordable for 66 per cent of people in NZ, and 64 per cent of people in Auckland (as of mid-2015).
