Mike Hosking: Exactly who can afford Phil Twyford's 'affordable' homes?

COMMENT: The power of a phrase might be undoing Phil Twyford's KiwiBuild dream.

Auckland Council has confirmed what Treasury has already told us a number of months ago - at least half the people in a city like Auckland can't afford an 'affordable' home.

And that's the danger of spin: the moment you call a home 'affordable' you create an expectation in people's minds. And every mind you have created it in, had a different take on that expectation.

Human nature being what it is, you will have come to your own conclusion based on your own perceptions and needs. If you don't have a home, and a home has been broadly speaking out of reach, and Phil and his new Government come along and tell you they are going to build 100,000 affordable homes, you immediately join two and two, come up with four - and you've already moved in.

The reality of the numbers or facts hasn't crossed your mind. Because why would it? After all it is affordable, because Phil said so.

So what we have is your three-bed affordable home is $650,000 (it was $600,000). It's gone up 50 grand in the time Phil has been parroting his dream, and it's gone up $50,000 in a time when he's built exactly no houses.

So one can very safely assume that by the time he gets to 100,000 (not that he will, but that's for another day) but by the time his dream has delivered that $650,000 will be God knows what.

Now the numbers as provided by Treasury and now Auckland Council are a bit over $100,000 of income. It depends on what the deposit is, but it's about $120,000 a year in income.

Now the reality is, you need to be in the top half of income earners to even be in the game. So automatically half miss out, so sorry they weren't actually that 'affordable' after all.

And given we know what's happening with wages, they're not going up a lot. And given we know what's happening to building costs and the price of that affordable home, that entry level wage is only going to get more and more out of reach.

None of which solves your problem if you haven't got a house. But then, that's the point isn't it? It was never going to.

The reality is that in big, popular cities (of which Auckland is one and places like Tauranga and Queenstown are fast becoming) many can't buy a house, full stop.
You could buy an apartment, or a unit, or live miles out in the country.

But it might be that the country's biggest city is off-limits to many, the same way Sydney, London and New York are. That's the cold hard economic reality of population growth and success, the trick, as Phil is learning or will learn, is not to pretend it isn't.