Welcome to the land of milk and honey ... and the world's most unaffordable housing

Several years on from New Zealand's housing affordability problems becoming all but obvious, they've now gone past being serious and becoming tragic.  Auckland and Wellington might rank just eighteenth equal in a survey of the world's most liveable cities, but measured against our incomes New Zealand cities now top the polls as the most unaffordable places in the developed world in which to buy a home.  Where it takes less that ten years work for household on the median income to buy a median-priced house in Ireland, the US and Canada, it takes the NZ's middle-income household nearly twenty years! [Herald story here.  Worldwide housing affordability study here at the Demographia site.]

Little wonder. As income levels elsewhere have been soaring, wages in this pathetic authoritarian backwater have failed to keep pace (see graph at right, and story here).  Meanwhile -- as demand for housing continues to soar -- when regulators aren't making it well-nigh impossible for builders and developers to build and develop on the land they own, planners are making it well-nigh impossible to buy land on which anyone is even allowed to contemplate building and developing. [See many, many previous posts here on Building, Housing, Sprawl, Urban Design and the RMA.]

Both rural and urban land is in huge demand for development; but the supply of land has been effectively nationalised.  Our cities have been ring-fenced by eco-zealots eager to calcify rural New Zealand into a bucolic museum, while within our cities (which represent just 1.4% of the country's land) restrictions on land supply and the development of that land is severely restricted, and the choice of housing types severely limited.  (Greater London area is about the same size as Greater Auckland, for example, yet while London houses over ten million people in a mixture of terrace housing, walk-up apartments and tower blocks, Auckland is home to just over one million -- and as Auckland's planners argue against the sprawl their policies induce, they severely restrict the density within the city that their restrictive ring-fencing demands.)

The result of these restrictions on building and on land supply is that New Zealand needs around 35,000 houses a year to keep up with demand, while home builders are restricted to producing just 24,000 houses every year -- and thanks to the explosion of building regulations and the increasing emigration of skilled builders, each of those houses costs much more to produce than it ever has, on land that is more expensive than it's ever been.

It's instructive that the most expensive houses in New Zealand relative to income are now no longer those in Auckland.  Tauranga -- whose 'planners' have enthusiastically embraced the anti-development 'sustainable' philosophy of so called 'Smart Growth' -- now has the country's most unaffordable houses.  No coincidence when you consider that the world's most unaffordable cities are overwhelmingly those who have most enthusiastically embraced 'Smart Growth.'

The real culprit here isn't the council officers or planners or regulators who make the plans that restrict the supply of land and the ability of bui9lders to develop it for would-be home-owners; the real culprits are the Resource Management Act that gives planners and regulators the power over other people's property, and a culture that assumes that local governments need planners and regulators to plan and control.

All this, and the bastards responsible still airily deny they're the problem, while proposing measures that will only make things worse! 

This lack of clearsightedness is perhaps because the situation seems irredeemable -- which it is, unless the red-tinted glasses of the planners and their acolytes are removed.  A similar problem is easy to see in the traffic jams that snarl up our cities, which as Andrew Galambos says are "a collision between free enterprise and socialism. Free enterprise produces automobiles faster than socialism can build roads and road capacity."

That same collision of capitalism and socialism in our daily traffic jams is ever present too in NZ's severely unaffordable housing markets: a bubble inflated by the freewheeling demands of prosperity and credit and new immigration colliding with a simultaneous suffocation of supply by the socialism of the state. At a time when greater supply is desperately needed to mop up exploding demand, 'planners' -- those throwbacks to the failed central planning regimes of socialist states -- are throttling the supply lines we do have.

It's time that unemployment was urgently increased, among the fraternity of planners who have condemned New Zealand's home-owners to half a lifetime of paying off their houses.

UPDATE:  As reader Wayne points out, with the usual suspects busy patching up their server stories, there's an unusually good thread on this topic at Kiwiblog.