Not quite the world’s most unaffordable city…but almost, is the result of the latest Demographia survey of 367 world cities. The reason, as any well grounded person will know, is that demand for housing is outstripping supply. It really is that simple. And why is there a shortage of land supply in Auckland, and nowhere else in New Zealand? Because Len Brown and his crony Councillors have made it so through the outrageously undemocratic Auckland Plan.
Auckland has the fifth least-affordable houses in the world
Auckland's housing affordability has worsened, with the city climbing from the world's ninth most expensive city to fifth in a year.
The annual Demographia survey, released today, compares prices to incomes in 367 cities. Auckland is one of the worst in the world due to extremely high house prices coupled with moderate wages.
With a median price of $748,700, and a $77,500 median income, Auckland has a house price-wage multiple of of 9.7. Any more than 3 is classified as unaffordable by the report's authors.
Report authors Hugh Pavletich, a Christchurch-based former property developer, and American Wendell Cox argue that a shortage of land drives up prices.
Don Brash, former Reserve Bank governor, said housing affordability was "[overwhelmingly] a function of just one thing: the extent to which governments place artificial restrictions on the supply of residential land".
Kim Campbell, Employers and Manufacturers Association chief executive, worries how essential workers would be able to afford to live in Auckland, with its tightly constrained geographic limits.
Mr Campbell recommended more land be freed up for building.
Teachers, nurses, firefighters, bus drivers, police officers and other key workers often could not afford to buy in Auckland, leaving the city with a grim future when it needed the next generation of key workers, he said.
Property Council chief executive Connal Townsend expressed disquiet at Demographia's findings.
"The crisis is getting worse and worse. It's all about lack of supply of land which in Auckland is more than 50 per cent of the cost of a new house. ... The solution is to free up more land and free up the constraints which prevent more density."
Unbelievably Phil Twyford, Labour housing spokesman, blamed the National government. It isn’t National that controls Auckland, Phil. It is Labour through its Labour Mayor and majority Labour Council. Until Auckland gets rid of the dead hand of Labour running the city the crisis will continue.
Len Brown has resisted all attempts to work with the government to free land supply. His vision is to squash us all into the city centre to justify his vanity projects like the CRL and cycleways in his futile ‘UP not OUT’ UN Agenda 21 programme of destroying everything that is uniquely Auckland.
Phil Goff is also Labour. Goff is backed by the same team that backed Brown. Goff is Len on steroids.
Davis Seymour comments
Watching the Annual Demographia updates is a reminder that a Cabinet of baby boomers has done nothing effectual on housing affordability.
In a past life I was a spokesperson for Demographia and I watched the Auckland market grow progressively out of control. Where the median house was 6.4 times the median income in 2009, for instance, in this latest report it has hit 9.7.
The report again reminds us not only that Auckland’s market is dysfunctional, but why.
Those who grumble about a lack of a capital gains tax should look at the ten least affordable markets in the (global) Demographia Survey. All of them except Auckland are there despite having a capital gains tax.
Those who like to blame the immigrants should take a look at fast-growing American cities such as Atlanta and Houston, that have maintained functional housing markets despite rapid growth.
The real explanation is closer to home. In the 1990s there were 50,000 homes built in Auckland. In the past decade there were only 40,000 built. That is despite home buyers paying record high prices and the population being 50 per cent larger than it was in 1991.
Again, the international evidence is crystal clear. Ideologically driven restrictions on the growth of cities has pushed up house prices and the government is doing little about it, certainly nothing effectual.
If the Government were serious about housing affordability it could begin with the following steps:
· Ban the use of city limits such as the Rural Urban Boundary. Analysis suggests that such boundaries have increased the price of residential land by as much as eight times over the cost of bare land
· Introduce tax incentives for councils that allow development, for example sharing the growth in company tax in any physical jurisdiction with the local council, as proposed by the New Zealand Initiative.
· Propose proper RMA reform rather than the one-step-forward-two-steps-back mish mash that it’s negotiated with the Maori Party. It would reform the ambiguous ‘principles’ sections and introduce a recognition of property rights
ACT is the only party that has consistently campaigned on evidence based policies for expanding housing supply and making the housing market function.