NZ housing “most unaffordable in the world”

The Economist says that New Zealand now has the most unaffordable housing in the world, according to Newshub.

New Zealand housing most unaffordable in the world – The Economist

Across five different measures, New Zealand has come out on top of three of the five measures for the most expensive global housing market.

New Zealand has had the highest rise in house prices, costs the most against the average person’s income and now has the biggest difference between house prices and renting prices.

This will only apply to some parts of New Zealand, particularly Auckland and Queenstown. The rest of the country is less unaffordable to varying degrees.

In the latest edition of The Economist, figures show that in the past 46 years New Zealand’s house prices have risen by more than 8 percent on average a year.

It’s a trend repeated among other first world countries, including the United Kingdom, which had a 7.65 percent average rise annually over the same timeframe, and Australia, where house prices rose more than 6.4 percent a year on average.

According to The Economist, those numbers have remained solid in the past seven years with New Zealand’s numbers showing a 7.9 percent consistent increase per year since 2009.

The Economist puts this trend down to “a growing horde of rich foreigners” coming to New Zealand because the see it as a “safe haven”.

“In 2016 overseas investors bought just 3 percent of all properties. But their purchases were concentrated at the expensive end of the market, which is growing fast: sales involving homes worth more than NZ$1m increased by 21 percent.”

The findings don’t get any better for New Zealanders, showing that in the last 10 years, the average price against a person’s income has risen dramatically.

This makes it difficult for people needing to get large mortgages, and very difficult for first home buyers in some parts of the country.

Building has ramped up significantly over the past year or two, but it was slow to catch up with an increasing population, causing a shortage and initiating the price spiral.

 

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34 Comments

  1. Alan Wilkinson

     /  11th March 2017

    If the Economist says the pressure is at the top end of the market then it should be looking at median statistics, not average, to judge the impact on most people.

    Reply
    • Kitty Catkin

       /  11th March 2017

      People ARE buying houses, of course. Even in Auckland, and most of us don’t live there.

      London papers are saying the same as Auckland ones.

      I hadn’t too much sympathy for the Booths. If they had wanted that price, they should have asked it. If, when we bought this house, someone had immediately offered us enough for it to make us mortgage free then, would we have refused to flip it on ? Of course not. Who would ?The Booths are just angry because they didn’t ask more and get more.

      Reply
  2. I must leave out the word “democratic” because that means we voted FOR it! This is what we ‘collectively’ want.

    I consider it ludicrous at best, and it should actually be de-jure ‘criminal’, for a so-called ‘prosperous’, so-called ‘enlightened’ First World nation to have the most unaffordable housing in the world.

    Perhaps its because our so-called ‘prosperity’ is founded upon having the most unaffordable housing in the world …?

    Scroll down the stat graphs in the link below – which I’ll also post on Open Forum – to find a graph with data from US, Canada, Germany, Italy & Japan 1948 – 2010 “Housing is the driver of rising inequality” …

    http://www.top.org.nz/key_indicators_of_new_zealand_s_inequality_eruption

    Reply
    • Alan Wilkinson

       /  11th March 2017

      Regulation caused this and maintains it.

      Reply
      • Yeah Alan … Since when has there been housing without regulation?

        Reply
        • Alan Wilkinson

           /  11th March 2017

          Limited uptake of planning schemes

          Despite the Act requiring councils to prepare planning schemes, most were still not interested in, or were opposed to, planning (Barry-Martin, 1956, p. 20). Councils failed to prepare planning schemes and central governments were unwilling and unable to force them to do so. By 1953 only one small city and 12 boroughs (most with populations under 1000) had schemes finally approved, while two other cities and 11 boroughs and two town districts had schemes provisionally approved. (BarryMartin, 1956, p. 24). Councils were able to avoid the time limits for the preparation of schemes by relying on section 34, which enabled councils to prohibit work which appeared likely to contravene a scheme, had one been approved, or would contravene town planning principles, or would interfere with the amenities of the neighbourhood. The section was originally intended to provide councils with some interim control of development between the passing of the Act and the final approval of a scheme under it. However, the Supreme Court’s interpretation of the section enabled councils to continue to rely on it long after the date by which councils were meant to have prepared a planning scheme.

          Click to access using-land-draft-report-research-note.pdf

          Reply
          • Interesting …

            “Would the world have been spared the horrors of Vietnam if John F Kennedy’s assassin had missed his mark?

            We’ll never know. Just as the frazzled Aucklanders who every day clog the arteries of their dysfunctional city will never know how much less stressful their lives could have been had the first Labour government’s comprehensive plan for a more geographically compact and intensively settled Auckland, bound together by a cheap and efficient public transport network, not been deliberately scrapped by the National Party.

            What we do know for a certainty, however, is that the Holland government’s rejection of Labour’s plan – a decision taken in the interests of expanding its power-base, and hugely enriching its financial backers – made the anarchic, automobile inspired, socially dislocated sprawl of present-day Auckland inevitable.”

            – No Left Turn – Chris Trotter – Chapter 8 pg 202

            “It has been considered polite among NZ historians not to dwell too much on the intellectual and cultural shortcomings of the first National government, but the truth … is that they were the crudest, most ignorant and bigoted collection of far-right reactionaries by which NZ has ever had the misfortune to be governed.”

            Ibid pg 192

            Reply
            • Alan Wilkinson

               /  11th March 2017

              Trotter obviously doesn’t know much about Auckland. It is a city composed of a lot of small towns joined together. It took me a weekend once to drive its whole waterfront, as its squeezed between two harbours and multiple inlets. It was never going to be compact. He is fantasising and ignorant.

            • Definitely not fantasising Alan …

              “The credit for unearthing this long-lost and forgotten plan for Auckland belongs to Dr Chris Harris, an urban planner with the North Shore City Council … Harris came upon a number of highly developed regional plans published in a series of appendices to the 1946 edition of Hansard. (pg 205)

              … the government promised to electrify Auckland’s railways and extend the Eastern semi-circle into a complete circle … the rising industrial area of Penrose, and the CBD, would both be served … The existing Southern and Western lines would cross the circle, and a harbour bridge would extend the railway service to the North Shore …” (pg 206)

              As Harris notes … “It is surely a paradox of NZ’s urban history that Wellington, a much smaller city, should have better transportation infrastructure than Auckland …” (ibid)

              All this, in 1946! So thanks again National … and Sir Dove Meyer Robinson was not proposing anything original with his ‘light rail’ idea …

            • Alan Wilkinson

               /  11th March 2017

              I’m not saying there were no plans. I’m saying it is fantasising that Auckland could have been kept compact given the desire to live by the sea and the range of small towns all around the centre.

          • And all I’m saying is it could have been a WHOLE LOT BETTER …

            Especially rail (and electric buses) have lagged behind automobiles ever since … The Harbour Bridge went ahead without provision for rail … How f^%ken stupid is that?

            What’s happening now is effectively a repeat and continuation plus an extension of the Holland government’s bellicose dismissal of Labour’s plans – and feathering their cronies nests – with expansion out to Pukekohe, Pokeno and Te Kauwhata in the South, and Warkworth, Wellsford and Kaiwaka in the North … all dependent on automobiles … making us all more-and-more dependent on more-and-more automobiles … which history tells us no amount of road building can EVER keep up with …

            ” … the crudest, most ignorant and bigoted collection of far-right reactionaries by which NZ has ever had the misfortune to be governed.”

            Reply
  3. According to a report on housing affordability published by the Productivity Commission in March, it costs 15-25% more to build a house in New Zealand than in Australia. Analysis of the quantity surveyor’s bible, Rawlinsons (which publishes an annual guide to building costs on both sides of the Tasman), revealed the starkest disparity was between Auckland and Melbourne. The mid-range cost to build a home in Auckland was cited by Rawlinsons at $1650 per square metre last year; in Melbourne it was $1175. The report also cited the construction costs of a four-bedroom house built by the same building company in Rodney, Auckland, and in Geelong, Victoria. The Rodney house cost NZ$177,500 to build; the Geelong house was NZ$156,368.
    I note that 966 Auckland house applications were approved last month what is fairly close to the Government target of 1,000 houses per month in the greater Auckland area. Why the difference in costs between Australia and NZ? The first point is scale, Australian construction is far larger than NZ, so logically the Aussies get the benefits of scale. Next is transport costs that are higher for NZ. The costs of construction materials in NZ are escalating at 7 to 8% per annum and some items are reaching 10%. Builders blame wage costs and higher prices from sources. This is when our inflation (CPI) is still running at 2,4% average over the last decade. One has to be a tad cynical of the 5% extra the builder is getting?

    Reply
    • Kitty Catkin

       /  11th March 2017

      I heard that the extra cost is also because Kiwis tend to tweak the design rather than just having the original plan built as Australians do and that this, of course, adds to the price. This seems strange to me-the plans that I have seen look very attractive, why spend money changing them ? A friend in Sydney who was earning really good money as a professional couldn’t afford to buy a place there-except a hovel in some inaccessible outer suburb. He did eventually, with government help, but it seemed extraordinary that someone on his income would need (or get) this !.

      Reply
      • Thanks Kitty, I should have noted that as a factor as well. However the examples were for identical designs in NZ and Aust.

        Reply
      • Alan Wilkinson

         /  11th March 2017

        Site differences make a significant difference too, I suspect. Aussie is largely flat and very stable land. NZ the opposite. Hence the need for expensive foundations, access, basements and design tweaks.

        Reply
        • Hyper-inflated market differences make the biggest difference though …

          Reply
          • Alan Wilkinson

             /  11th March 2017

            Those are land prices, not building costs. Regulation favours standardisation and makes adaptation and tweaking expensive. We’ve got it in spades.

            Reply
            • Kitty Catkin

               /  11th March 2017

              I was talking building costs, of course. I can’t remember the amount after this time, just the surprise that people would bother and spend that much extra. Plans that I have seen look like houses that anyone could live in.

  4. Blazer

     /  11th March 2017

    Govt looking after top 10%…couldn’t care…less.

    Reply
    • Kitty Catkin

       /  11th March 2017

      As far more than 10% voted for them, that can’t be true.It’s not true, of course, it’s nonsense.

      Reply
  5. The simple fact is affordable housing worked best in this country when it was fairly heavily encouraged, regulated, financed and/or subsidized by elected governments …

    Back then they may have had downstream, future pay-offs in mind …?

    This fact bristles like arrows in the heart of the prevailing political-economic paradigm.

    Reply
    • Alan Wilkinson

       /  11th March 2017

      How would you know?

      Reply
      • Elementary deduction my dear Wilkinson …

        Reply
        • Alan Wilkinson

           /  11th March 2017

          Deduction requires facts that you don’t have.

          Reply
          • Kitty Catkin

             /  11th March 2017

            Sherlock never said ‘Elementary, my dear Watson.

            I would have to say that I can’t see the logic of the idea about governments, especially as that was so long ago.

            Reply
            • Kitty Catkin

               /  11th March 2017

              Sherlock Holmes !

            • @ Miss Kitty – “I can’t see the logic of the idea about governments, especially as that was so long ago.”

              Never heard of State Housing, State Advances Corporation, Group Housing – Keith Hay and Reidbuilt Homes – and government loans Miss Kitty? I’m talking about the 50s through 70s …

              Here’s something to read, although Te Ara paints a somewhat negative picture of ‘the burbs’ …

              http://www.teara.govt.nz/en/suburbs/page-5

            • Kitty Catkin

               /  12th March 2017

              Keith Hay U Reid were private companies, State Housing has never been a majority of houses, I would imagine, and State Advances would be what it sounds like, surely.

              But that was then , this is now.

            • Alan Wilkinson

               /  11th March 2017

              Total state houses have ranged from 30-70k during the period that the population has ranged from 1.5-4M. They were never more than about 6% of the total NZ housing stock. You are looking through a rose-tinted microscope, PZ.

            • Kitty Catkin

               /  12th March 2017

              6% ? Hardly a number that would make a vast difference. The state houses were built in the style of the time, so there seem to be more than there were, I think.

            • No, you’re looking through Right-Wing blinkers Alan … and cherry-picking what I said as well … You’re a bullshit artist …

              State Advances & Group Housing [as per my comment] was responsible for the bulk of house construction during the 60s & 70s … think of the Auckland suburbs like Otara … Te Atatu … Massey … Glen Eden … Tamaki …

              It was government encouraged and government sponsored …

          • … government regulated … government planned …

            Reply

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