Auckland housing priced out of $77,000 wage earners' pockets

Auckland is the fifth most expensive city in the world in which to buy a house.

The city has jumped from ninth to fifth place in the 12^th Demographia International Housing Affordability Survey covering 367 metropolitan markets in nine countries.

Report authors Hugh Pavletich, a Christchurch-based former property developer, and American Wendell Cox put unaffordability down to land shortages, driving up prices to levels where a person on a median income will struggle to buy a home.

The report says Auckland has a house price-wage multiple of 9.7, which is severely unaffordable.  Median house prices two to three times median household incomes is regarded as acceptable.

The most affordable major metropolitan markets are in the US, which has a moderately unaffordable rating of 3.7.followed by Japan, with a median multiple of 3.9.

Hong Kong's Median Multiple of 19 is the highest ever recorded in the survey.

Sydney was the second least affordable major market, with a median multiple of 12.2. Sydney’s increase of 2.4 points from its 9.8 median multiple in 2014 is the largest year-to-year deterioration ever indicated.

Vancouver was the third least affordable major market, with a median multiple of 10.8. Auckland, Melbourne and San Jose all had unaffordability multiples of 9.7.

Mr Pavletich says the biggest losses in housing affordability have been associated with urban containment policy. Severely unaffordable housing – a multiple of 5.1 or higher - has occurred only in major metropolitan areas with urban containment boundaries.

 “Corrective measures that could halt or reverse losses in housing affordability from urban containment policy have either been absent or not been implemented.”

As a result, says Mr Pavletich, urban containment policy has been a profound policy failure, as house prices have doubled and tripled relative to incomes in many metropolitan areas.

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