KEY POINTS:
Median house prices in Auckland are now outstripping those in all of Australia's major cities, except Sydney and Perth.
Auckland's median of NZ$450,000 ranks ahead of Canberra on A$395,000 (NZ$436,000), Melbourne on A$380,000, and Brisbane on A$345,000.
And a new international housing affordability survey describes Auckland, Wellington and Christchurch as "severely unaffordable". Of 157 international locations, Auckland ranks 21st least affordable city in which to buy a home, with its median price almost seven times the median household income.
Melbourne ranks a few places behind on 23rd, with its median price 6.6 times the median income. Sydney, meanwhile, sits in 7th place with an affordability rating of 8.5. Its median house price is A$516,000. Christchurch is 31st on the list (with an affordability rating of 6) and Wellington is 47th (rating of 5.4). Los Angeles tops the list - with an affordability rating of 11.4.
Nationally, Australia and New Zealand have a housing affordability ratio of 6.6, compared with 5.5 in Britain and 3.7 in the United States. The internationally accepted standard for affordability is that the median house price does not exceed three times the median household income.
But though the figures might show Auckland is still more affordable than Sydney, it's not the whole picture.
Hugh Pavleitch, co-author of the Demographia survey, said Sydney's multi-million-dollar harbourside realty skewed median prices in that city and nationally. Many houses in Auckland were now fetching considerably more than similar properties in the larger Australian cities. The NZ$535,000 median for Auckland's North Shore is comparable to the whole of Sydney median of A$516,000.
Author and media commentator Gordon McLauchlan said he had noted the diminishing gap between property prices in Australia and New Zealand on a recent visit to Sydney. "You can buy a studio apartment around the Cross and Potts Point [inner city] for about the same as you pay in Auckland."
Extra costs such as stamp duty (payable when buying a house) were offset by higher wages across the ditch - generally around 30 per cent more, he said. Friends who had bought an inner-city apartment in Melbourne had paid considerably less than they would have for a similar property in Auckland.
In May, a survey by financial analysts JDJL showed it took nearly all the average weekly Auckland take-home pay (99.5 per cent) to make a mortgage repayment on a median house. For all of New Zealand the figure was 74 per cent, while Australians forked out just 34.5 per cent of their weekly earnings.
Sydney real estate agent and president of the New South Wales branch of the national real estate institute, Cristine Castle, said stamp duty and land tax were major disincentives to buying property in many cities in Australia. New Zealand had "appealing" incentives and she knew several locals who had bought property in Auckland.
When spoken to by the Herald on Sunday Castle was showing a prospective buyer a two-bedroom townhouse in Oatley, 21km south of central Sydney, with an asking price of A$459,000. Another A$40,000 would buy a new two-storey townhouse or single-storey villa in the same area. A three-bedroom standalone house needing some work, would go for around A$600,000, she said. "But then in the inner city the sky's the limit, and that's what's driving the market."
Neil Prentice of Bayleys in Auckland said the agency had few properties on its books for less than the median, although "you could buy a shoebox in the city for $200,000".
Half a million might buy a unit in a terrace house complex, "but that's kind of communal living".
Graham Smith of Barfoot and Thompson's city office said a quarter of the agency's sales were for properties in the $750,000-plus bracket. But $500,000 would still buy a "nice two-bedroom apartment in the inner city in a block of 100 or so" or a "very tidy family home" in some of the more "unfashionable" suburbs such as Glenfield, Mt Roskill, Papatoetoe, Manurewa and Papakura.
Carey Smith, CEO of Ray White NZ, said the pricing structure in Auckland was considerably lower than Sydney's, "particularly when you take the exchange rate into consideration."
Two Sydney waterfront properties had recently sold for $15 million and $18 million, "and that far outstrips anything we're likely to see here".
Averaging it out
Australian property prices (A$):
Adelaide$302,000
Brisbane$345,000
Canberra$395,000
Hobart$294,000
Melbourne$380,000
Perth$455,000
Sydney$516,000
Auckland property prices (NZ$):
North Shore$535,000
Waitakere$378,113
Manukau$433,250
Auckland City$492,000
Papakura$317,500
