Housing affordability

Demographia's annual survey came out on Monday. They compare the price of the median house to the median household income in each city. On that measure, Auckland housing is less affordable than housing in San Francisco.

Nowhere in New Zealand should be as unaffordable as San Francisco. It takes effort to screw up your housing supply so badly that you're more unaffordable than San Francisco. A big congratulations to everyone involved in this disaster.

Sally Lindsay over in the National Business Review covers some of the Initiative's take on it; I also have a chat there with NBR's Andrew Patterson you can listen to.

Over the past four years, the Initiative has produced a series of reports and opinion pieces on New Zealand’s housing crisis. Initiative research head Eric Crampton says the latest Demographia report is even more sobering reading.

“San Francisco is an American poster-child for housing unaffordability. It is haemorrhaging people and jobs to cities with sensible land use planning and affordable housing and now Auckland is even more unaffordable than San Francisco."

New Zealand policymakers have been grappling with the rapid appreciation in house prices over recent years, blaming councils for limiting land use and poor infrastructure planning. More recently, the Reserve Bank's prolonged period of extraordinarily low interest rates has stoked credit expansion, prompting governor Graeme Wheeler to impose lending restrictions to curb mortgage lending.

Dr Crampton told NBR Radio's Andrew Patterson fixing infrastructure financing and letting councils better share in the benefits of urban growth along with planning reform and liberalisation, with a financial framework that encourages development have to be at the top of the policy agenda if New Zealand wants affordable housing.

He says it is imperative the government and Auckland Council make housing affordable again, as well as developing a strategy to ensure supply can keep up with growing demand.

Meanwhile, over at Interest.co.nz, I go through more of the problems in Oxfam's report on wealth inequality. One perverse effect of Auckland's housing mess: if you own the average house in Auckland free and clear, you're likely in the world's top 1% of wealthiest people.