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A second study has confirmed that housing is at its least affordable, as calls grow for the Government to provide more housing.
Massey University's quarterly home affordability series shows that buying a house is at its most difficult level since the studies began in February 1989.
It echoes a study by interest.co.nz which shows that last month it took 73.5 per cent of the average take-home pay to afford a standard mortgage payment on a median-priced house.
In January 2002, housing had only taken 40.3 per cent of take home pay.
Massey's property studies professor Bob Hargreaves said the studies used different wage data but came to similar conclusions -- "things are pretty grim for first home buyers".
He agreed with interest.co.nz that there was a need to increase the housing supply.
"Some people are saying we can address the supply side of things by relaxing resource management constraints and allowing more subdivision out on the fringes, which equates to urban sprawl.
"I'm not sure that's the answer. When I look at New Zealand cities and compare them with overseas cities, it seems to me that we've got huge potential in our existing cities to go more dense."
The Housing Corporation could "easily put three houses where they've got one" on some properties, and by selling off some of its stock could build more houses on state land zoned for medium density.
Prof Hargreaves said another advantage in the Government getting involved was to offset the bad name which the "leaky building crisis" had given medium density housing.
State houses were known for their solid construction and although the private sector would be probably lead any big Government-led housing drive, "leaky building"-shy councils would be responsible for supervising them.
Prof Hargreaves said a lack of big building companies was also an obstacle.
"Part of the reason why building costs are so high is most builders are just small time, they're only building a few houses every year.
"If you've a large contract... you can drive the building costs down."
But he said the private sector needed incentives to build starter homes "because there's a lot more profit in building the bigger mansion-type stuff, or even middle-income housing".
Prof Hargreaves said the only good news from this quarter's survey is that the deterioration in home affordability was moderating.
It fell 1 per cent compared to a drop of 5.2 per cent in the previous quarter. The average decline for the last four quarters was 1.8 per cent.
He thought rising mortgage rates would continue to slow the rate at which housing affordability dropped.
The series -- which weighs house prices and mortgage interest rates against the national average wage -- shows house prices grew almost twice as fast as average wages over the year.
The all-districts annual decline in house affordability was 9.8 per cent.
Meanwhile, the Green Party has called for a range of measures to address the housing crisis, including increasing housing density around Auckland's traffic corridors rather than "urban sprawl".
The Government should also be taking more responsibility for more plentiful, cheaper housing, Green housing spokesperson Sue Bradford said.
"A rapid increase in the number of social housing units with income-related rents would take some of the heat out of the rental sector and make social housing more than just the housing of last resort that it has become," she said.
The party also called for a restriction on house sales to New Zealand citizens and permanent residents, a capital gains tax on investment properties, and a review of the tax rules surrounding LAQCs (loss attributing qualifying companies).
- NZPA
